Abstract
Industrial policies — meaning policies by which governments attempt to shape the sectoral allocation of the economy - are back in fashion, and rightly so. The major insight of welfare economics of the past fifty years is that markets by themselves in general do not result in (constrained) Paretoefficient outcomes (Greenwald and Stiglitz, 1986).
Paper presented to the International Economic Association/World Bank Industrial Policy Roundtable in Washington, DC, May 22–23, 2012. The authors would like to thank the participants in the seminar for their helpful comments. This paper is based on Greenwald and Stiglitz (2006, 2014b) and Stiglitz (forthcoming). Greenwald and Stiglitz (2014a) provides a sequel to this paper, focusing on the implications of learning for industrial policy in the context of Africa.
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Greenwald, B., Stiglitz, J.E. (2013). Industrial Policies, the Creation of a Learning Society, and Economic Development. In: Stiglitz, J.E., Lin, J.Y. (eds) The Industrial Policy Revolution I. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1057/9781137335173_4
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