Industrial policy in developing countries

Traditionally, proindustry policies were associated with incentives for import substitution and an inward-oriented development strategy. This is no longer so. Whereas in the past, world-market orientation was seen as implying reliance on primary production, today policies favoring international competition and export orientation are considered compatible with policies favoring rapid industrialization. Differences of opinion on the appropriate degree of public intervention remain. The debate between “purist” laissez-faire advocates and those who believe in industrial planning, public investment, and generous subsidies often obscures the real need for reduction in antiexport bias, rationalization of incentives, and reform of public-sector activities.