Inter-industry labor mobility in Taiwan, China

Do flexible labor markets lubricate growth? Using data from Taiwan, China, to analyze the effects of labor market flexibility, the authors find that: 1) Workers are more likely to move to industries that tend to be similar to their industry of origin (including intrasectoral moves that would be considered intersectoraal if there were more sectoral disaggregation). The degree of similarity between two industries is measured in several ways, all of them based on the input-output flows across industries. Workers are more likely to move from industry"i"to industry"j"if"i"supplies a large share of"j's"inputs, receives a large share of its inputs from"j,"or uses many of the same inputs. 2) Moves to more similar industries produce larger wage gains. This is especially true when the industries'similarity is based on their using many of the same inputs. Thid may be partly because the close proximity of industries, occupations, and individuals provides an environment in which ideas flow quickly from person to person. 3) Gains are more likely to accrue to industries as a result of labor mobility.Labor Policies,Water and Industry,Health Monitoring&Evaluation,Public Health Promotion,Environmental Economics&Policies,Water and Industry,Health Monitoring&Evaluation,Environmental Economics&Policies,Industrial Management,Banks&Banking Reform

The case for industrial policy : a critical survey

What are the underlying rationales for industrial policy? Does empirical evidence support the use of industrial policy for correcting market failures that plague the process of industrialization? To address these questions, the authors provide a critical survey of the analytical literature on industrial policy. They also review some recent industry successes and argue that only a limited role was played by public interventions. Moreover, the recent ascendance of international industrial networks, which dominate the sectors in which less developed countries have in the past had considerable success, implies a further limitation on the potential role of industrial policies as traditionally understood. Overall, there appears to be little empirical support for an activist government policy even though market failures exist that can, in principle, justify the use of industrial policy.Economic Theory&Research,ICT Policy and Strategies,Water and Industry,Industrial Management,Markets and Market Access

Is African manufacturing skill-constrained?

Total factor productivity has been low in most Sub-Saharan Africa. It is often said that the binding constraint on African industrial development is the inadequate supply of technologically capable workers. And many cross-country studies imply that the low level of human capital in Africa is an important source of low growth in per capita income. The results of the authors'study do not necessarily conflict with this view. They indicate that in non-competitive industrial sectors, with little inflow of new technology, the contribution of technological abilities, however it is measured, is limited. If liberalization of the economy generated greater competition, or if export growth were accelerated --permitting the import of inputs embodying new technology - local skills could contribute significantly more in raising output. The experience of other countries also suggests that as the economy opens to flows of international knowledge - whether through technology transfers or through informal transfers from purchasers of export - the technological capacity of local industry becomes important. The policy implications of this analysis are clear: Without the prospect of a more competitive environment, continued efforts to develop high-level industrial skills may be wasteful. But the absence of such skills may limit the benefits to the industrial sector from future liberalization, as a result of which the supply response toimproved incentives may be weak.Environmental Economics&Policies,Economic Theory&Research,Curriculum&Instruction,ICT Policy and Strategies,Small and Medium Size Enterprises,Economic Theory&Research,Environmental Economics&Policies,ICT Policy and Strategies,Curriculum&Instruction,Health Monitoring&Evaluation

Industrial Policies and Growth: Lessons from International Experience

The application of industrial policies (IP) to direct resources to industries considered preponderant in achieving growth has been the chosen road by many emerging economies to tackle underdevelopment. Subsidized loans, variable taxes and differentiated tariffs are frequently used. Because of the successful experiences of some South Asian industrial policies, other emerging countries feel tempted of replicating the formula. However, these should be sure first that their governments have the necessary competencies. There are also two questions to ask on the role of IPs in the growth of these countries: first, Were IPs the dominant factor in the countries’ accelerated growth? The neoclassical approach offers an alternative explanation, that the Asian miracle was mainly the result of strong macroeconomic policies implemented. The second question is: Can the problems of some Asian economies in the 1990s be explained by the prolonged application of IPs? This article finds evidence to support that economic growth was due to strong macroeconomic foundations, such as fiscal discipline, controlled inflation and adequate real exchange rate levels. These variables were the driving forces that created high levels of saving and investment. On the other hand, the implementation of IPs is difficult in a globalized world where the regulations of international trade have become very important.

The East Asian Industrial Policy Experience: Implications for the Middle East

Japan, South Korea, and Taiwan are regarded as primary examples of countries that have derived great benefits from increasing integration with the international economy, without surrendering national autonomy in the economic or cultural spheres, by pursuing decidedly nonneutral policies with respect to the promotion of specific sectors and activities. This working paper addresses a series of questions in an attempt to assess the relevance of their experiences for the contemporary Middle East: Was industrial policy a major source of growth in these three economies? Can these outcomes be duplicated in the Middle East today, or do special circumstances or changes in the international policy environment prevent replication of the East Asian experience? Given the revealed costs and benefits, is replication advisable? And, if not, are there other, positive lessons that Middle Eastern countries can derive from the experiences of the East Asians?industrial policy, Asia, Middle East

Exporting, externalities, and technology transfer

Developed-country purchasers of exports from developing-country industrial firms have often provided considerable technical aid to the exporting firms. Some question the benefits to both OECD and developing country firms of such transfers. The authors developed a model to analyze the implications of diffusion of the transferred technology to other developing country firms and the impact of the market entry of additional firms. Surprisingly, diffusion upstream combined with entry downstream may increase the profits of both the OECD importer and its initial developing-country supplier because the diffusion increases competition both upstream and downstream. The intuition isthat a firm does not necessarily lose from competition in its market so long as its buyer/supplier is also forced to behave more competitively as a result of diffusion. A limited amount of increased competition at both stages moves the two firms closer to a vertically integrated firm.ICT Policy and Strategies,Environmental Economics&Policies,Markets and Market Access,General Technology,Economic Theory&Research,Environmental Economics&Policies,Economic Theory&Research,General Technology,ICT Policy and Strategies,Markets and Market Access

The Asian miracle and modern growth theory

In the past 35 years, China, Hong Kong, Korea, Singapore, and Taiwan (China) have transformed themselves from technologically backwards and poor economies to relatively modern, affluent economies. Each has experienced more than a fourfold increase in per capita income. In each, a significant number of firms are producing technologically complex products competitive with firms in Europe, Japan, and the United States. Their growth performance has exceeded that of virtually all comparable economies. How they did it is a question of great importance. Virtually all theories about how they did it placed investments in capital stock at the center of the explanation. The authors divide most growth theories about the Asian miracle into two groups: 1) The"accumulation"theories stress the role of capital investments in moving these economies along their production functions. What lies behind rapid development, according to this type of theory, is very high investment rates. If a nation makes the investments, marshals the resources, development will follow. 2) The"assimilation"theories stress the entrepreneurship, innovation, and learning these economies went through before they could master the new technologies they were adopting from more advanced industrial nations. They see investment in human and physical capital as an essential but far from sufficient part of assimilation. In addition, people must learn about, take the risk of operating, and come to master technologies and other practices new to the country, if not the world. The emphasis for assimilation theorists is on innovation and learning, rather than on marshaling. If one marshals but does not innovate and learn, development does not follow. These are complex theories that raise as many questions as they answer. The authors discuss differences in the way the two groups of theorists treat four matters: entrepreneurial decisionmaking; the nature of technology; the economic capabilities possible with a well-educated work force; and the role exports play in a country's rapid development.The differences between the theories matter because they affect our understanding of why the Asian miracle happened and because they imply different things about appropriate economic development policy.General Technology,Environmental Economics&Policies,Labor Policies,International Terrorism&Counterterrorism,Economic Theory&Research,Economic Theory&Research,Environmental Economics&Policies,Economic Growth,General Technology,Inequality

Employment and productivity in Kenyan manufacturing

This paper reports the results of an extensive set of interviews with Kenyan manufacturers. The question to which these interviews were addressed is the possibility of absorbing larger numbers of workers in the manufacturing sector. A number of rather surprising patterns appeared. First, existing manufacturing enterprises are relatively labour intensive; rarely do they exhibit the mechanization levels of the developed countries. Second, productivity of labour has risen rapidly not as a result of increasing levels of capital per worker but as the outcome of reorganisation, simple innovations and increasing utilization of capacity. These findings suggest that at least in the near future, say five to ten years, though manufacturing employment may grow, it will certainly grow more slowly than output