Industry Policy in East Asia
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Industry Policy in East Asia Fred Robins Graduate School of Management, Adelaide University, Level 3, Security House, 233 North Terrace, Adelaide SA 5000, Australia. E-mail: [email protected]
This commentary examines the future of industry policy in those countries of East Asia where it has a track record of apparent success. Particular attention is given to the attitudes of the policy-making elite in the aftermath of the Asian Crisis. The author judges that the priority given by regional governments to industrial development and their confidence in state-assisted industrialization is undiminished. At the same time, there is broad recognition of the need to take the WTO and greater global business integration fully into account. The consequence is likely to be changes in the mechanisms of industry policy, but not to the important place given to industry policy in ‘developmental’ states. Asian Business & Management (2002) 1, 291–312. doi:10.1057/palgrave.abm.9200021 Keywords: industry policy; Asian crisis; state-assisted industrialization; WTO; cronyism
Introduction Since the 1950s or 1960s, most governments in East Asia have accepted responsibility for the industrialization and accelerated development of their national economies; they have also taken this responsibility seriously. The promotion of economic growth in general, and the establishment of new industries in particular, have been regarded as core responsibilities of governments and public service bureaucracies alike and have typically been accorded the highest possible priority after provision of national security. Put simply, East Asian governments have accepted a more direct responsibility for growth and given it higher priority than their Western counterparts. They have also shown themselves perfectly willing to ‘intervene’ in the economy in pursuit of these objectives. These policies and actions have given rise to business– government relationships that differ from those in the West. The questions now, in the aftermath of the ‘Asian Crisis’, are whether there will be any fundamental change in industry policy thinking by development-oriented East Asian governments and to the business–government relationships they have developed. ‘Intervention’, of course, is economists’ code for any government action that influences prices. Such actions range from the imposition of bans, quotas and
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tariffs on trade, through domestic preference mechanisms in public procurement, local content requirements and offset agreements, to the provision of subsidized land and other financial inducements to lure desired foreign investment. It may also embrace such features as export processing zones and concessionary tax provisions. Where designed to achieve specific industry outcomes, rather than simply to raise revenue or for some other nondevelopmental purpose, such actions are normally coordinated and constitute what is commonly referred to as ‘industry policy’. All of these actions, and more of the kind, have been taken over recent
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