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Industrial Policy in Response to the Middle‐income Trap and the Third Wave of the Digital Revolution
Author(s) -
Wade Robert H
Publication year - 2016
Publication title -
global policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.602
H-Index - 33
eISSN - 1758-5899
pISSN - 1758-5880
DOI - 10.1111/1758-5899.12364
Subject(s) - middle income trap , mainstream , industrial revolution , the internet , theme (computing) , trap (plumbing) , industrial policy , third wave , middle income , third world , economic growth , economics , business , political economy , political science , development economics , market economy , engineering , demographic economics , law , computer science , environmental engineering , world wide web , china , operating system
The ‘middle‐income trap’ ( MIT ) is ‘real enough’ for policy makers in developing countries to take it as a serious threat to prospects for achieving ‘high’ average income. Those prospects are further clouded by the major changes occurring as the digital revolution moves from connecting people to the internet to connecting the internet to everything else, across many sectors of human life (the Third Wave). Both sets of forces raise the potential advantages of pro‐active industrial policy. Yet mainstream economic thinking – and the consensus of international development organizations like the World Bank – has long tended to disapprove of it, in the spirit of ‘The best industrial policy is none at all’. In light of the middle‐income trap, the Third Wave, and other conditions in the world economy, this essay discusses some of the big issues in the design of industrial policy, on the theme of how to do it well rather than how to do it less.