Clase Obrera E Industrializacion by John Rule

By John Rule

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No country in the world has been able to move from low- to middle- and high-income status without undergoing the process of industrialization. Structural transformation is always taking place because of changes in technology, in comparative advantage, and in the global economy. There is a need for some guiding principles on how “best” any society should move its human, capital, and financial resources from low- to high-productivity sectors. For the process to be efficient, coordination issues and externalities issues must be addressed.

To survive, they needed continuous protection and subsidies from the government, which created distortions and other macroeconomic problems: the cumulated financial losses by public enterprises aggravated the country’s savings deficit and contributed to balance-of-payments disequilibria, high inflation, and severe macroeconomic crises. In the end, virtually no developing country that launched industrial policies in the immediate post-World War II era was able to substantially reduce the income gap with that of the United States.

While the paper focuses on industrial policy from the perspective of developing countries whose economies are still within the global technological frontier, its main conclusions are relevant for all countries regardless of their level of development. 2 discusses some of the conceptual issues associated with industrial policy and its theoretical foundations, which are now part of various strands of the mainstream economic literature. 3 analyzes the reasons why industrial policy has often failed and stresses the fact that the mistakes were not in the design or implementation of the strategies followed by many governments but in the very development goals set by policymakers – goals inconsistent with the level of development of their countries and the structure of their endowments at that time.

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