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Book Chapter
Industrial policy for competitiveness in the energy transition
Green intersections: the global embedding of climate change in policy, 53-74.
Green objectives have reshaped public policy worldwide since the signing in 2015 of the Paris Agreement to limit global warming. Climate policy has moved from being one policy among many […]
Green objectives have reshaped public policy worldwide since the signing in 2015 of the Paris Agreement to limit global warming. Climate policy has moved from being one policy among many to an objective embedded in public policies at every level, including energy, industrial, fiscal, trade, development and foreign policies. However, a clear outcome from this policy shift is yet to be seen, with emissions still rising and climate impacts intensifying. There is also backlash against greening in a charged geopolitical environment.
Nevertheless, the chapters in this volume, written by a range of experts worldwide, show that in many countries and policy areas, green objectives are still driving fundamental changes and many lessons have been learned. The goals of reducing emissions and enhancing economic and societal resilience to climate change will persist as climate impacts become more evident, and as the green transition produces successes at city, regional and national levels. In this context, this Bruegel Blueprint offers a fresh intellectual framework for understanding how the green transition is shaping cross-sectoral impacts across the globe.
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Journal Articles
Public-Private Dialogs to Spur Export-led Growth: The Case of Productivity Taskforces in Namibia
Cambridge University Press: Elements in the Economics of Emerging Markets
This case study examines the implementation of Namibia’s first Productivity Task Force focused on the high-value fruit sector from 2021 to 2024. Productivity task forces, modeled after Peru’s Mesas Ejecutivas, […]
This case study examines the implementation of Namibia’s first Productivity Task Force focused on the high-value fruit sector from 2021 to 2024. Productivity task forces, modeled after Peru’s Mesas Ejecutivas, facilitate public-private dialogues to resolve sector-specific productivity issues. The Namibian Investment Promotion and Development Board, the Ministry of Agriculture, Water and Land Reform, and the Ministry of Finance led the Namibian task force. The study highlights critical stages, including the task force’s management and organization, political authorization, and the identification and resolution of productivity problems. While some challenges remain unsolved, the PTF has laid the groundwork for long-term improvements in government capacity, better public-public coordination, public-private collaboration, and a more business-friendly environment. The study offers valuable insights for implementing similar public-private initiatives in other developing countries. This title is also available as Open Access on Cambridge Core.
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Cambridge Elements are a new concept in academic publishing and scholarly communication, combining the best features of books and journals. They consist of original, concise, authoritative, and peer-reviewed scholarly and scientific research, organised into focused series edited by leading scholars, and provide comprehensive coverage of the key topics in disciplines spanning the arts and sciences.
Regularly updated and conceived from the start for a digital environment, they provide a dynamic reference resource for graduate students, researchers, and practitioners.
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Working Papers
Innovation Policies Under Economic Complexity
Recent geopolitical challenges have revived the implementation of industrial and innovation policies. Ongoing discussions focus on supporting cutting-edge industries and strategic technologies but ignore the impact on economic growth. In this paper, researchers explain why effective innovation policies should be place-based and multidimensional, leveraging countries’ existing capabilities and addressing countries’ current problems.
Recent geopolitical challenges have revived the implementation of industrial and innovation policies. Ongoing discussions focus on supporting cutting-edge industries and strategic technologies but hardly pay attention to their impact on economic growth. In light of this, we discuss the design of innovation policies to address current development challenges while considering the complex nature of productive activities. Our approach conceives economic development and technological progress as a process of accumulation and diversification of knowledge. This process is limited by the tacit nature of knowledge and by countries’ binding constraints to growth. Consequently, effective innovation policies should be place-based and multidimensional, leveraging countries’ existing capabilities and addressing countries’ current problems. This contrasts policies that lead to economic efficiencies, such as copying other countries’ solutions to problems that countries do not currently have.
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Book Chapter
A more globally-minded European green industrial policy
Sparking Europe’s New Industrial Revolution: A Policy for Net Zero, Growth and Resilience, 152.
Industrial policy has for a long time raised difficult questions for policymakers to unpick. What justifications are there for government intervention in market mechanisms, and how and to what extent […]
Industrial policy has for a long time raised difficult questions for policymakers to unpick. What justifications are there for government intervention in market mechanisms, and how and to what extent should governments intervene? What are the pros and cons of picking ‘winners’ for support? These questions have made a powerful return in the wake of the COVID-19 pandemic and geopolitical uncertainty, and because of the pressing need to move to net-zero emission economies. In addition, the European Union is reviving its industrial policy in the context of support given to companies in the United States under the US Inflation Reduction Act. This volume, produced with financial support from the European Climate Foundation, assesses what must be done to implement industrial policy in a way that will achieve overarching goals while minimising distortions. -
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Working Papers
Getting Back on the Curve: South Africa’s Manufacturing Challenge
The report aims to inform the government’s strategic approach towards manufacturing by analyzing the potential and limits for job creation within the sector. To meet that goal, we analyze the […]The report aims to inform the government’s strategic approach towards manufacturing by analyzing the potential and limits for job creation within the sector. To meet that goal, we analyze the sector’s main features and recent trajectory through the lens of global deindustrialization and South Africa’s particular industrial dynamics. Secondly, we provide evidence of how, when, and why South Africa has deviated from the global deindustrialization trends. Lastly, we provide a policy framework to address the bottlenecks that are preventing South Africa from getting back on a better track of industrial performance.
Related project: Accelerating Growth Through Inclusion in South Africa
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Journal Articles
Towards a Dynamic Model of the Industrial Upgrading with Global Value Chains
The World Economy
This research constructs a simple dynamic model to illustrate the micro‐mechanism of industrial upgrading along the global value chains. Our model predicts that as firms move up from downstream to […]This research constructs a simple dynamic model to illustrate the micro‐mechanism of industrial upgrading along the global value chains. Our model predicts that as firms move up from downstream to upstream stages, (a) there is higher profitability if and only if the following three conditions are satisfied. First, the increasing rate of sunk cost (including R&D expenditure) over sequential stages of production cannot be sufficiently large (endogenous sunk cost effect). Second, the decreasing rate of change of intermediate input demand with respect to the price set by firms at a production stage cannot be sufficiently high (intermediate input price effect). Third, the decreasing rate of change of intermediate input demand with respect to the pricing dynamics over the sequential stages of production cannot be sufficiently large (sequential pricing uncertainty effect); (b) total cost is lower if and only if the decreasing rate of change of input demand with respect to the price is sufficiently large; (c) output is higher if and only if and the decreasing rate of change of input demand with respect to the price is not sufficiently large; and (d) the price decreases. We show that the empirical patterns revealed in China are consistent with our model’s predictions.
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Working Papers
China and the Global Economy: Medium-term Issues and Options – A Synthesis Report
China’s economic and social achievements since the beginning of reform and opening are unprecedented in global history. Managing the growth process in this continuously changing environment has required great skill […]China’s economic and social achievements since the beginning of reform and opening are unprecedented in global history. Managing the growth process in this continuously changing environment has required great skill and the use of unconventional economic policy. Now China has entered a new era in its development process with a set of challenges largely different from those of the recent past. Some problems – such as growing internal and external structural imbalances, increasing income and regional inequality – have arisen from, or been exacerbated by, the very pattern and success of high growth since reforms began. Others are newly posed by rapid changes in the global economy. These challenges can best be tackled in an integrated and coordinated fashion. This report, supported by the China Economic Research and Advisory Programme (CERAP), identifies the primary challenges facing China today and presents options for meeting them.
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Reports
Toward a Strategy for Economic Growth in Uruguay
The Uruguayan economy is recovering from the 2002 financial crisis that disrupted its banking system, caused a collapse of its currency and seriously affected its fiscal solvency. The crisis was […]The Uruguayan economy is recovering from the 2002 financial crisis that disrupted its banking system, caused a collapse of its currency and seriously affected its fiscal solvency. The crisis was clearly associated with the collapse of the Argentine economy and its concomitant currency, banking and debt crises. Both were also related to the sudden stop that followed the Russian crisis of 1998, which prompted an important realignment of the real in January 1999, a fact that had exerted enormous pressure on bilateral exchange rates within Mercosur. In this post-crisis period, Uruguay now faces several challenges to attain a sustainable growth path. This report proposes a series of recommendations towards this end. Implementing a strategy to accelerate growth inevitably involves interventions at both the macro and the micro level. The macro level involves the maintenance of a stable and competitive real exchange rate, so as to create a stable and encouraging environment for export growth. The authors take up each of these elements of the growth strategy. They first focus on the design of incentive policies for economic diversification and promotion. Then they discuss next the macroeconomic complements, with special emphasis on maintaining a competitive and stable real exchange rate. -
Working Papers
Horrible Trade-offs in a Pandemic: Lockdowns, Transfers, Fiscal Space, and Compliance
In this paper, we develop a heterogeneous agent general equilibrium framework to analyze optimal joint policies of a lockdown and transfer payments in times of a pandemic. In our model, […]In this paper, we develop a heterogeneous agent general equilibrium framework to analyze optimal joint policies of a lockdown and transfer payments in times of a pandemic. In our model, the effectiveness of a lockdown in mitigating the pandemic depends on endogenous compliance. A more stringent lockdown deepens the recession which implies that poorer parts of society find it harder to subsist. This reduces their compliance with the lockdown, and may cause deprivation of the very poor, giving rise to an excruciating trade-off between saving lives from the pandemic and from deprivation. Lump-sum transfers help mitigate this trade-off. We identify and discuss key trade-offs involved and provide comparative statics for optimal policy. We show that, ceteris paribus, the optimal lockdown is stricter for more severe pandemics and in richer countries. We then consider a government borrowing constraint and show that limited fiscal space lowers the optimal lockdown and welfare, and increases the aggregate death burden during the pandemic. We finally discuss distributional consequences and the political economy of fighting a pandemic.
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