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J Econ (2012) 105:285287
DOI 10.1007/s00712-011-0247-3
BOOK REVIEW
Cimoli, M., Dosi, G. and Stiglitz, J. E. (eds.): Industrial policy and development. The political economyof capabilities accumulation
596 pp, Oxford University Press, Oxford, New York 2009, Hardcover, 66.00
Francesco Bogliacino
Published online: 1 November 2011 Springer-Verlag 2011
In the policy circlesin this historical conjuncturethere is a large support for the formula evidence based policy (whether this is effectively in the agenda is another matter of course) and a very small consensus for industrial policy, the latter usually blamed as typical of old fashioned bad economic management.
If we take the above stances as the mainstream, this collective work edited by Cimoli, Dosi and Stiglitz represents both a strong critique and a frontier analysis. It is a frontier analysis in the sense that the book provides a very detailed historical account of the development path followed by different regions in the world and a very cautious assessment of the policy packages that have been adopted by different countries in different epochs. It is also a critique, in the sense that it rejects the idea of the development process as mechanics (Lucas 1988) where policies are either irrelevant or harmful. Indeed, the authors show that such an idea is simply against all the empirical evidence. While in the debate those who are proponents of industrial policies normally spend most of their effort trying to defend the very logic of intervention, the authors clarify that the market failure approach, in which an intervention can be justied only if market does not work, is awed: the markets never work in the way in which they are depicted by textbooks, so to avoid considering the overall world as a gigantic market failure (making the concept meaningless), it is necessary to discuss markets as institutionally embedded and use as a benchmark their realistic contribution.
The logic of industrial policy in an open economy is put forth at the very beginning. As stated at page 3 in the Introduction, today specialization shapes the future path in terms of potential productivity and demand...