Creating a Learning Society by Joseph E. Stiglitz

Author:Joseph E. Stiglitz
Language: eng
Format: epub
Tags: -
Publisher: Columbia University Press
Published: 2014-04-02T04:00:00+00:00

Learning involves spillovers (externalities) that will be imperfectly internalized in a market economy, and

In circumstances in which learning might largely be internalized—where there is a monopoly—the distortions created by the monopoly itself require government intervention.

Furthermore, we have described, using simple analytic models, how intervention might lead to higher growth and societal welfare.

This chapter moves from the broad analytic discussion of the previous five chapters to the central policy debates. Industrial policies have been highly controversial, and trade policies, including those designed to help restructure the economy, even more so. In this chapter, we explain why many of the arguments used against these interventions are misplaced and suggest how trade and industrial policies might more effectively contribute to creating a learning economy.

The chapter is divided into nine sections. In the first, we explain why much of the debate about industrial policies is misplaced—whether governments want to or not, they are, in practice, always engaged in industrial policies. In the second, we focus more narrowly on developing countries, arguing that these policies are especially relevant to such countries. In doing so, we refute the long-standing Washington Consensus presumption against industrial policies. In the third, we turn to the objectives of industrial policy. This is followed by a more extensive discussion of trade policy as an instrument of industrial policy, a continuation of the analysis of the previous chapter. The fifth section focuses on one of the most important issues of industrial policy facing many developing countries—how to make the most of their natural resources. The final four sections of the chapter contain more general reflections on industrial policy—its historical role, the role of political economy, and strategic considerations.

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