Book contents
- Frontmatter
- Contents
- List of Tables, Figures and Boxes
- Foreword
- Preface
- Acknowledgements
- List of Abbreviations
- 1 Introduction: Framework of Analysis
- 2 Context and Conditions of International Competition
- 3 Alternative Theories of Competitiveness
- 4 Firm Strategy and New Industrial Organization
- 5 External Economies: Organization of Interfirm Relations
- 6 Reputation and Trust: A Firm's Relations with Stakeholders and Others
- 7 Innovation and Upgrading
- 8 Government Policies
- 9 The Experiences of China and Mexico
- 10 Summary and Concluding Remarks
- Appendices
- Bibliography
- Index
8 - Government Policies
Published online by Cambridge University Press: 05 February 2013
- Frontmatter
- Contents
- List of Tables, Figures and Boxes
- Foreword
- Preface
- Acknowledgements
- List of Abbreviations
- 1 Introduction: Framework of Analysis
- 2 Context and Conditions of International Competition
- 3 Alternative Theories of Competitiveness
- 4 Firm Strategy and New Industrial Organization
- 5 External Economies: Organization of Interfirm Relations
- 6 Reputation and Trust: A Firm's Relations with Stakeholders and Others
- 7 Innovation and Upgrading
- 8 Government Policies
- 9 The Experiences of China and Mexico
- 10 Summary and Concluding Remarks
- Appendices
- Bibliography
- Index
Summary
The market mechanism will not allocate the right amount of support to innovation activity not least because of peculiarities of knowledge as an economic commodity… there is a divergence between private incentives and social incentives which government can correct.
(Metcalf 1997, 411)At no time, therefore, has the building of indigenous technological capabilities in developing countries assumed as much urgency as it has today.
(OECD 1992, 2759)Introduction
Industrialization in developing countries requires catching up with industrialized countries by building up and accelerating supply capacity, making the supply capacity efficient and competitive in the internal and external markets, and moving up the value added ladder and value chain by upgrading the industrial structure. The upgrading of the industrial structure requires, inter alia, enhancing the technological capabilities of the country in order to increase value added per worker. The implication of the neoclassical theory of industrialization and growth is that developing countries will catch up automatically as long as market forces are allowed to operate. In other words, in the long run GDP per capita will grow at the same rate in all countries.
Do catch-up and technological upgrading take place automatically as suggested by the proponents of neoclassical theory? The new growth theorists argue that differences in economic development across countries are due to the differences in endogenous knowledge (Romer 1986). As shown in Chapter 3, according to the proponents of capability building industrial development requires development of endogenous capabilities.
- Type
- Chapter
- Information
- Competitiveness and DevelopmentMyth and Realities, pp. 175 - 206Publisher: Anthem PressPrint publication year: 2012