Industry policy in East Asia: a literature review

Abstract

This literature survey examines the role of industry policy in the industrialisation of East Asian economies since the early 1980s. The first section outlines the 'neoclassical' model and the interventionist literature that has arisen to challenge it. It distinguishes three strands in this literature: the 'structuralist' and the 'strategic' trade models and the 'fair trade' argument. The following sections evaluate the empirical evidence for Northeast and Southeast Asian countries, discuss the analytical and empirical validity of the interventionist literature and in conclusion draw attention to the diminished relevance of industry policy, given the rapid market-driven integration taking place in the Asia-Pacific region.