Thursday, January 7, 2010

"New" Industrial Policy & Consultants

I find it quite impressive that there's now such a consensus on "New Industrial Policy" but I've yet to see where this has gone beyond restating the generalities of reducing self-discovery costs, uncovering and removing bottlenecks, establishing fora for private-public sector dialogue etc. It seems to me that the problems, in the African economies I'm familiar with anyway, come more in the actual implementation of these things rather than the design. Even if we can identify some important bottlenecks, and even prioritise, and then even establish which institution should be responsible for implementing the reform, it seems that this is not enough. Since Ministries tend to be fairly protective of their own turf, any kind of policy reform with implications for Ministries other than the author of the policy document are liable to fail. This actually coincides with the issue of ownership - even if you manage to get a strategy or policy designed by a particular Ministry, if related MInistries were not involved, then their ownership is also minimal. I suppose that highlights the need for greater collaboration and coordination but have you seen how many working groups, committees and task teams already exist in these places?? And we want to add more? Well, actually we want to build on them but how do you do that if the impetus for that change is coming from outside i.e. the consultants?

Further, one of the big market failures discussed in relation to industrial policy in particular is that of coordination failure - the need for govermnent to step in to simultaneously improve a range of aspects relating to industrial development, from education to infrastrcutures and legal institutions etc (see the Hausmann & Rodrik work for example). Government failure is of course recognised, but given the role of "coordination", it seems that the primary focus of developing country governments and the support from donors should therefore be on improving coordination. Are there any other mechanisms than working groups, committees and task teams which can facilitate this kind of work? How can they be made to be more efficient? Is it a political issue or is it capacity?

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