Caught between self-destruction and reform

While neomercantilist policy measures, in the form of both import protection and export subsidization, are still gathering momentum and are just entering their second decade with evidently high growth rates, the dynamic post-war growth of world trade itself has at least temporarily come to a halt: trade fell in volume in 1981 by just under 1% and, in 1982, by about 2%. A new round of multilateral trade negotiations is in prospect for 1985, during which further tariff reductions will be on the agenda, but the main item for discussion will be questions surrounding a reform of GATT which emerged from the Tokyo Round. The following article seeks to establish the true significance of the GATT principles today, investigates the causes of the erosion of discipline within GATT, and deals with important aspects of present efforts to introduce reforms

Challenges from new trends in foreign direct investment

Foreign direct investment flows to developing countries have undergone major changes in recent years, both regarding their scope and their determinants. This article reviews some new trends in this area and focuses specifically on their implications for export processing zones which in the past have been a widely used instrument to attract foreign investment. How are they affected by the new developments and what can be their role in the future

New technologies and industrialization prospects of developing countries

Industrial technologies are both an outcome of the industrialization process and one of its main driving forces. The introduction of new technologies can be seen as one of several important factors which directly and indirectly change the context and modes of international industrial production, thus being among the key determinants of the international division of labour. Given the accelerating pace of technological development in industry, there is an urgent need not only to identify incipient technological breakthroughs but above all, at an early stage, to analyze their short-and long-term implications for the worldwide industrialization process and to reassess the validity of crucial assumptions underlying developing countries’ current industrial strategies

Operationalising basic needs: A few fundamental reflections

Development research (not so much practical development policy-making) has been recently marked by an increased orientation towards the satisfaction of basic needs. This raises the question as to whether indicators exist which could adequately provide for a sufficiently exact operationalisation of at least the basic physical human needs (nutrition, health, shelter, clothing and education). This would enable improved measurement of the degree to which target levels have in fact been reached and an evaluation of alternative economic strategies. The following article sets out to examine possible ways of operationalising basic needs

Pacific basin interdependencies: A case for large-scale economic cooperation?

Japan's meteoric economic rise, the hardly less impressive growth of a number of newly industrialised countries in South-East Asia and the enormous mineral wealth of the region have long caused academic and political observers to show keen interest in the economies of the Pacific. Proposals for institutionalised economic cooperation in this region have been under discussion since the mid sixties but have increased in number and significance in recent years; this paper analyses their objectives, limitations and chances

The increasing role of the private sector in Asian industrial development

In recent years, there has been a powerful trend on the global scene and above all in the Asian region for the private sector in general and private industry in particular to assume a growing, and indeed leading, role in economic and industrial development. This article reviews some recent trends of private investment and privatization policies pursued in selected Asian countries and discusses the implications of private sector-led industrial development for the role of governments and international organizations

The petrodollars and the world economy

The quadrupling of the oil price by the OPEC in 1973 was a poignant event in the post-war development of the world economy. Which measures and mechanisms conduced to the international income redistribution necessitated by the hoisting of the oil prices in the past five years

Managing Transformation under Uncertainty

The paper in a nutshell: In this paper, we present the normative concept of green industrial policy, which we define as encompassing any policy measure aimed at aligning the structure of a country’s economy with the needs of sustainable development within established planetary boundaries. We elaborate on why we need green industrial policy, how it differs from conventional industrial policy, why it is faced with significantly bigger challenges, and how these can be met. What and how we produce and consume is largely shaped by markets. However, markets fail to solve many of the environmental challenges we are facing. Therefore, we need governments to intervene, thus reclaiming the primacy of public policy in setting and implementing societal objectives. While safeguarding the sustainability of human life on our planet makes green industrial policy a highly normative undertaking, the economic case for green industrial policy is strong as well – the success stories of such ‘green’ frontrunners as Germany and Denmark demonstrate the competitiveness potential of the new technologies. However, as shown by decades of discussion on industrial policy, government intervention almost invariably brings about risks of political capture and government failure. Green industrial policy is thus not only governed by ethical norms, but also by politics. The risks of failure are magnified by the urgency and scale of today’s global environmental challenges, requiring particularly bold, comprehensive and well-orchestrated government intervention under high uncertainty. By highlighting lessons learned from practical cases of both success and failure, we show how these risks can be, and have been, managed. In particular, we submit that a broad- based social vision and contract need to be forged – supported by change coalitions and coupled with policy process safeguards, openness to policy learning, and an alignment of green industrial policies with market mechanisms

Is Germany’s Energy Transition a case of successful Green Industrial Policy? Contrasting wind and solar PV

In this paper, we address the challenge of Germany’s energy transition (Energiewende) as the centrepiece of the country’s green industrial policy. In addition to contributing to global climate change objectives, the Energiewende is intended to create a leading position for German industry in renewable energy technologies, boost innovative capabilities and create employment opportunities in future growth markets at the least possible cost. The success in reaching these aims, and indeed the future of the entire concept, is hotly debated. The paper aims to provide an up-to-date assessment of what has become a fierce controversy by comparing solar photovoltaic (PV) and wind energy along five policy objectives: 1) competitiveness, 2) innovation, 3) job creation, 4) climate change mitigation, and 5) cost. We find mixed evidence that Germany reaches its green industrial policy aims at reasonable costs. Wind energy seems to perform better against all policy objectives, while the solar PV sector has come under intense pressure from international competition. However, this is only a snapshot of current performance, and the long term and systemic perspective required for the energy sector transformation suggests a need for a balanced mix of a variety of clean energy sources