MGMT3102 Lecture Notes - Lecture 4: Four Asian Tigers, Balanced Budget, Industrial Policy
Document Summary
Mgmt3102 lecture four: industrial policy in east asia: from latecomers" to asian tigers", differences in views on what explains catch-up. Improve labour, financial and technology markets: neoclassic economist"s arguments, the state should not try to manage flows of goods, services, and capital across national border. Industrial policy imparting directional thrust, or favouring some industries, or firms ahead of others, is not recommended by neoclassic economists. Intervention: theory supports this, so does the experience of east asia: when there are strategic needs, well designed interventions promote faster development than free markets. Inability of investors to act rationally when there are interdependent investments in vertically related activities. Intervention in the mature tigers: all tigers (except hk) intervened selectively in: In argentina, india, mexico and turkey, subsidies were allocated on the principle of give away: any business was given something for free in the hope that it would provide something socially worthwhile.
