Industrial Policy | Economics for People with Ha-Joon Chang

[Music] the controversy surrounding so-called industrial policy has arguably been the most heated and frankly most vicious even by the standard of the subject you know well into the 80s into all the 90s there were a lot of free-market economists who are trying to argue that industrial policy didn't exist in countries like Japan and South Korea which were at the time famous for their industrial policies pehla pehla said one of the leading free trade economists is saying that the Korea government

really didn't do much industrial policy other than one or two sectors like a steel and basically what it did was that to provide general infrastructure and good business environment now this was very easy to falsify if you flip through the financial press you know I remember reading this Financial Times article in the late 80s saying that South Korea is arguably the most planned economy outside the Soviet bloc despite that serious journals were publishing articles making this kind of assertion o

nly because this is ideologically more comforting for the mainstream and it's a bit like I don't know the punch of Korean scientists a study attorney arguing that it rarely rains in England and somehow English scientists had to take this seriously and argue against it some economists like Justin Lin the former chief economist of the World Bank Dani Rodrik Ricardo Hausmann these economies have started to use your classical theoretical tools to justify at least certain forms of industrial policy s

o industrial policies become more acceptable to the mainstream at least our since the financial crisis but even slightly before that quite a number of countries including the US Germany and so on started rediscovering and strengthening the industry policy for various reasons so one reason was the collapse of the finance driven growth model in a number of countries which are made people realize that no you cannot build you know an economy on expectations you need to make things you need to raise

productivity in the last decade or so a lot of new technologies have emerged you know so that is a race now to occupy the commanding heights before other countries do so artificial intelligence green technologies biotechnology there has been a recognition that you really need to do something to cope with the rise of China now China's are still relatively speaking or poor economy I mean the per capita incomes not even ten thousand dollars there are many very backward parts are economically speaki

ng the overall level of technology is quite low but it has been rising very rapidly and in some areas like nanotechnology and solar panels and so on it is really threatening the leading country so a lot of countries are now waking up to the fact that actually we need to do something about this and we need more proactive government intervention befitting the status of the most controversial topic in economics even the definition is subject to debate so one debate is what is the object of our indu

strial policy so a lot of people including myself will argue that it it is a policy intended to promote the development of the manufacturing sector but there are others who say that no is industrial policy so industry is more than manufacturing you should include mining production of electricity and gas and things like that still others argue that no as far as it targets certain economic sectors it doesn't matter whether it's targeting manufacturing or industry or agriculture or services so any

sexual intervention should be called Industrial Policy another controversial definition issue is that of selectivity it is targeting particular sectors they have been variously called strategic sectors leading sectors key sectors or whatever others believe that it should also include general or horizontal policies policies that benefit all industries equally like infrastructure investment research and development education they believe that selected policies is a pest ineffective and at worst ha

rmful I think this dichotomy between general and selective industrial policies is a false one because in a world with limited resources whatever policy you choose you are favoring some sectors of others education ok maybe up to say lower secondary level is that that pretty general so it benefits all sectors equally but beyond that education is actually quite as specific you know in countries like Germany and Japan they have a very developed a vocation education system so from the age of 14 or 15

I meant that people begin to really learn and hone their skills in particular industries at the university level that we are all specializing if the government gives more funding to particular types of engineering departments then it's actually favoring sectors that will use those types of engineering infrastructure I mean infrastructure is not something an armored force and can be remoulded you either build a railway between your I don't know copper mine and the Seaport or you build air port f

or say the flower growing region so once you have decided to build infrastructure you are committing yourself to promoting or not promoting particular sectors because infrastructures have particular locations and they have different host implications for different industries I mean Airport will be no good for copper mining got the region because you know that you cannot export copper with that airplanes whereas if you are growing flour if you are growing a fresh fruit that could be crucial indus

trial policies always selective the question is what do you choose it's simply not true that you can have this general policy that will even-handedly affect everyone in the 18th and early 19th century Britain was the most protected economy in the world between the mid 19th century and the Second World War the US was at that almost are protected economy in the world you know on other countries that I had regulations on foreign direct investment and so on and so on so it is not as if industrial po

licy ended in these countries with their economic maturity industrial policy continued yes protectionism came down after the Second World War before the Second World War tariff levels are really high in many countries 50% in Britain and even relatively low figures can hide a lot of selective protection so for example Belgium might have had nine ten percent average industrial tariff rate in the late 19th century but some sectors like iron were getting sixty percent protection textile was getting

eighty percent and so on so anyway protection was very high until the Second World War but then it does started coming down note that basically it was only in these 70s that the levels of industrial tariffs in today's rich countries the level that developing countries have today since the World Trade Organization was established in 1995 there has been you know quite serious trade liberalisation in developing countries and today their average industrial therapy is about 10% but that's the level t

hat today's rich countries reached our own knee in the 1970s by which time they were actually a lot wealthier than your average developing country today moreover Totti declining carry protection was also accompanied by increasing the range of industrial policy measures that is used and especially between the 1950s and the 1980s many rich countries like France Japan Austria Norway Italy Finland used strong industry policy so all these countries first of all heavily regulated the foreign direct in

vestment in order to you know promote domestic firms especially Japan and Finland virtually ban foreign direct investment until the 1980s all of the above-mentioned countries except for Japan used the state-owned enterprises in strategic sectors so until the 1980s for them for France and Austria had two of the largest state-owned enterprise sectors in the non socialist non-oil producing oil at the time the state-owned enterprises were producing thirteen fourteen fifteen percent of GDP hmm France

and Japan used their planning they had five-year plans I mean these were indicative planning so was not mandatory planning like in the Soviet Union but this was a serious attempt to first of all provide a vision for the future shape of the economy by announcing priority sectors the kind of POD financial and other suppose that the government is going to give to them how this priority sectors are going to relate to each other and with other sectors and yeah I mean it was that planning in a very s

erious sense yeah Germany and actually parts of Italy had many regional governments that used industrial policy to promote small and medium sized enterprises in the region so they used the banks are that they own I mean many of these regional government had public banks to provide affordable long-term finances to small and medium sized enterprises in the region they work with our local industry associations to promote cooperative arrangements to supply inputs that are too expensive to be provide

d by individual forms like research and development export marketing and Walker training when you have a relatively small farms I mean things like especially R&D and export marketing which have a lot of but the fixed cost a lot of upfront cost are very difficult to provide the United States are may pretend that at least after the second world war it has had little Industrial Policy where actually it has had one of the strongest industrial policies in the world only that it is not called industry

policy is called R&D policy so almost all the sectors in which at the u.s. that today has internal technological leadership were initially developed by the US government usually US military so computer was initially developed by Pentagon internet later was that developed by the Pentagon they make conductor was initially almost entirely financed by u.s. Navy my colleague Mariana matsukata has become famous for writing this article showing how just about every single piece of technology the micro

chips GPS system touchscreen and so on contained in modern mobile phones were initially developed by US military research especially during the cold war between the 1950s and the 80s the US federal government financed fifty and seventy percent of total national R&D depending on the year and the corresponding figure in state-led economies of Japan and Korea whoa only about 20 percent so who is actually state-led the US government has a enormous influence on the evolution of its that industry is t

hrough these research funding programs I mean even today that the ratio has come down but even today is that are around forty percent the ratios are still twenty twenty five percent in Japan and Korea other countries was slightly different because they all had different conditions so for central Thailand Singapore had huge state-owned enterprise sectors I mean Korea's a state-owned enterprise sector wasn't small I mean it was about 10 percent of GDP which is about international a bridge but in t

he case of Singapore and Taiwan these were much bigger Singapore still produces 22% of GDP with through state-owned enterprises the corresponding figure for Taiwan is 16 percent but you know it was higher in the earlier period when the private sector is less developed like Japan Korea and Taiwan were overall very hostile to foreign direct investment although in some sectors labor-intensive the export-oriented manufacturing like common shoes mainly trainers stuffed toys and things like that they

were open to foreign investment but in general they regulated foreign investment very heavily Singapore China a bit different because they use foreign direct investment a lot more so in the case of Singapore they very carefully identified sectors through Industrial Policy planning that they want to attract foreign firms to and then they go out and seek partners and they they talk to them and ask them what do you wanna fact that we want you to come and run your business in our country recently Si

ngapore built the second Airport in a country with very little and in order to host aircraft maintenance industry I mean this is not a random act because in Singapore 90% of the land was is owned by the government once they built that aircraft maintenance companies came and then rolls-royce relocated his aircraft engine research division to Singapore you know it's a very different form of FDI attraction than what we normally think is needed you know China has had fewer legal restrictions on what

foreign companies can do compared to Japan Korea or Taiwan but it very cleverly used is a strategic position to do it this informal bargaining so but what it does is you know being well a one of the biggest markets in the world and be our country with at least are considering is that labor apart general ecology very well trained workers and good infrastructure it uses that attractiveness r22 this informal bargaining with the foreign companies so give us that more technology train our workers hi

re more local managers source more locally it's not written in the law but the attraction of the Chinese economy as a site of production and market is so large that a lot of companies have said yes that that will do that because we want to work with you well finally as for the industry policy in non East Asian developing countries a period between the 1960s and the early 80s when developing countries used a lot of Industrial Policy this is frequently condemned by mainstream economists as a perio

d of misguided industrial political ISI or in for substitution industrialization what you have to realize is that economies in Latin America and sub-saharan Africa have done much worse since they adopted neoliberal policies and abandoned industrial policy in the 80s most countries in these regions have experienced what is called prematurity industrialization which means that your manufacturing industry goes into decline even before you fully industrialization also it is important to note that th

ere have been cases of successful industrial policy at least in relation to some sectors Brazil develop civilian aircraft industry initially as a state-owned enterprise and privatized are since the 1990s and this is now the third largest aircraft manufacturer in the world a lot of regional airlines in the United States are flight the plays are made by Embraer malaysia has had significant success in electronics industry and the palm oil processing industry the common sector in Ethiopia in the rec

ent period has been a bit of a success although is slightly too early to tell very surprising it that who's becca stan has had quite a bit of success with the automobile sector with by by emulating korean-style industrial policy so okay I mean these are relatively that minority of examples but you know it is not true that everything that other countries did or failures I mean it's not because lack of theoretical reasons why industrial policy hasn't work in many countries so that I am going to ju

st start group them broadly into three categories the first set of arguments I call the interdependence argument the first one is based on this idea of demand complementarities basically forms different industries they buy from and sell to each other how you develop different sectors is going to be different according to this pattern of mutual supply and demand so one type of this argument was called the big push argument when you are trying to develop an industry in our backward economy you bas

ically have to develop the related industries together otherwise they will not succeed you know so for example if you're trying to build an automobile factory you know country full of rice farmers okay maybe you can make the car but who are going to sell it to there are all these poor people and we're going to get the inputs up for the car you need steel you need glass basically the idea is that yes therefore you develop all these different complementary industries together and then they can buy

and sell to each other you know workers working in steel factory unlike rice farmers will have money to buy a car the steel factory can sell to the you know car company the car company can sell trucks are to the steel company and so on so Albert Hirschman thinking along a similar line however had a different view he said it's not as if all sectors are equally impactful on other sectors you know there are some industries like automobile which buys from a lot of other industries you know and he h

olds a relationship between different sectors linkages so you build the auto a factory and then it generates that demand for steel glass rubber it then also that supplies are to other sectors like retail logistics you know and the indicative planning exercises of France Japan and Korea are the best examples of industrial policy based on this logic because that they were planning the economy on the basis of what if you know we want to develop this sector do we need to develop other sectors togeth

er develop the steel industry first before you I don't know develop machine tools industries and then of course that is the familiar externality arguments the classic example is the government promotion of activities that generate positive externalities like R&D and training whether through subsidies or regulations are in the policy of the United States is the best example of industrial policy based on the externality arguments more recently economist like Lynn and Roderick have developed this i

dea information externality which means that when a form enters a new industry in a country with no prior experience in that industry that form actually generates information about that industry that can be used by other forms before they decide to move in or not to move in yeah it's an interesting idea but actually in a way not very original because Malaysia had used our policies based on these ideas since the 1950s and they had this scheme of Pioneer firms so if you are entering a new industry

you are given extra subsidies you know totally you have arguments based on the need for the coordination of competing investments this is an idea that is not really recognized in the mainstream literature but was very important in industrial policy especially Japan and Korea the idea is that if competing firms are simultaneously embraced without knowing the other firms plans there could easily be over investment now in textbook economics this isn't a problem because if something doesn't sell yo

u immediately switch to something else but in reality machines are dedicated workers that are at least partly dedicated so you cannot say invest in I don't know making automobile and then realize that the demand is not enough that it basically means scrapping the machines and firing workers that you originally hired to make so industrial policymakers in Japan and Korea were very concerned with this which they called excessive competition so they Tita two things are to deal with this one ex-ante

planning so they had this a licensing system and said if you want to invest in automobile or some of the more important sectors you need to get government permission and the government will look at that the investment proposals and say no actually it is going to be too much you shouldn't invest that this time around maybe five years later when we do this exercise again we'll let you have priority and then we move on to the capability arguments the first of these is of course the infant industry

argument the argument that governments of relatively backward nations need to protect and nurture young industries of their own before they can grow up and can compete with leading firms in the world market this logic of course has been used by virtually all countries throughout the history of capitalism another class of capabilities argument is arguments for regulation of direct input of technology either through technology licensing basically targeting a license from a more advanced company to

sell you the technology all through foreign direct investment and basically many governments have regulated this process to ensure that once artistic knowledge is calm you also develop the capabilities to use them productively and at least make incremental improvement unless you do something about the technological capabilities to use these technologies properly what happens is that you import technology basically on a so-called turnkey basis so everything comes ready you just turn the key and

it once unfortunately things go wrong unfortunately that things get outdated you don't know what to do and except for calling the original company and they'll charge a lot of money to solve your problem some countries are like Japan Korea Taiwan they directly regulated technology licensing so they would say things like you cannot pay more than three percent of your revenue as the licensing fee you know or they were they might say that this technology actually looks outdated you cannot import it

and so on and finally the policies that I said were frequently used by local governments in Germany in Italy and the national government in Taiwan to help them accumulate capabilities you know because without R&D you know without technical consultancy provided by a government agency at a subsidized price how odd is that small and medium-sized enterprises are going to raise their productivity and then we have a set of arguments which are classified on the risk and uncertainty in many countries go

vernments that set up financial institutions to provide long term financing for investment typically these are known as Development Bank's kfw in Germany kdb in Korea jdb in Japan pnts in Brazil but these Development Bank's will give you very often subsidized loans for three years five years sometimes even ten years in the common can also set up a state-owned enterprises if no one was willing to do it the South Korean government had this idea to build a steel mill back in 1965 and it tried to ge

t financing from foreign donors and the World Bank which was at the time advising these donors said that this is insane Korea you know it's got income less than five percent that of United States it's got very little capital a lot of labor you should and labor-intensive industries and it wants to build a steel mill the country doesn't even produce enough raw material please don't keep money to them you go against that receive economic theory you don't even produce raw materials you want to set i

t up as a state-owned enterprise and 0.0 ex-army general as the CEO what more do you need to fail yeah well they managed to peel this at the enterprise with money from colonial reparations from the Japanese and by 1973 it went into production by the mid-1980s it became one of the most efficient steel makers in the world it was privatized in 2001 but mainly for ideological reasons emitters that are making a lot of money still and yeah it is still like the fourth largest that still maker in the wo

rld yeah so seen from today's point of view it is obvious that Korea should have set this up yeah but at that time everyone said wow this is too risky future is too uncertain so the government stepped in with his own money secondly talk of man can help forms and industries restructure themselves in the face of big changes beyond their control financial financial crisis dramatic technological changes rise of China what have you the 1970s Volkswagen the German auto manufacturer got into trouble so

it was nationalized well regionalised if you like it was basically taken over by the local government about the state of Lower Saxony Neda's oxen in German and yeah actually that government of Nita's accent that still owns about 20% of Volkswagen because of that history the US you know the country of so called free enterprise you know that basically nationalized General Motors after it went bankrupt in 2008 and have restructured it you know who that competing the the electric car market and fin

ally you have policies that are intended to help workers cope with risk involved in the restructuring process through things like unemployment insurance job search service and subsidized retraining the Scandinavian countries are Sweden and Finland especially have been very good with this so the workers there are not very resistant to the introduction of new technologies and redefinition of jobs and so on because they yeah I mean no one likes to lose their current job but it's not the end of the

world you know they lose their job they'll get unemployment benefit which is 65 and 75 percent they'll get up to two years of that provided that they call in to retraining programs and then you will have to the personal consultant are given to you by the government to plan your retraining and find your job in new sectors so actually that you know Sweden is one of the most robotised economies in the world the Swedish workers are to not fear of us anyway so that if you use these kind of things wel

l it can actually facilitate that industrial restructuring and development and even though they are not in the show policy proper they can be quite important yeah then let's talk about implementation issues you know the fact that there are theoretical justifications for a policy doesn't mean that you will succeed with that policy in practice because that the policy has to be well designed and well implemented so let's stop first of all look at policy design well I think the most important thing

is that the policies need to be realistic in order to be successfully implemented but that doesn't mean that industrial policymakers should only try safe things you know this is the view of the wall bank you know in this famous report on East Asian miracle in 1993 the World Bank recommended that yes I mean some of the industrial policies used by countries like Japan and Korea even though they are highly unorthodox are from our theoretical point of view kind of work but they work only because the

se countries had exceptionally capable bureaucracies do not try this at home so it might have worked for some people it is not going to work for you you shouldn't even try just inland basically recommends that you should try to imitate countries that are slightly above you so look at countries that have pocket income twice maybe three times higher than yours and try to emulate their industries well that will be safer but that will mean that Korea would have never develop steel industry in the 19

60s Japan would have never developed auto industry in the 1950s now when you try difficult things that it will be failures but you know ask that the Economist Joseph Stiglitz are like to say if you are not failing you are not trying hard enough so you need a portfolio of industries so yes that are quite a few safe bet and a larger number of medium difficult things and a small number of very difficult things you know but then unless you push yourself in that kind of way you will never progress be

yond your current level also Industrial Policy constantly needs to be updated and adapted to changing conditions and our conditions change all the time you know the world economy changes our new competitors emerge new technologies emerge yeah and also you might have had some projection of the future development Oh buddy say industries and forms receiving your support for development but then they may have been mistaken yeah maybe they are growing much more quickly than you had thought was possib

le and then yeah you should curtail protection and push them more aggressively into the export market maybe they are not doing as well as that you thought they would and then you need to look at it closely is it because there was some unforeseen circumstances that were beyond their control or was it because these forms are getting lazy and that kind of living a comfortable life we are in the worlds of protection so you have to constantly that I watch how things are evolving and adapt yeah and th

en there's the question of political economy first of all successful industrial policy needs to have the right political base it is well known that powerful landlord class as you see in Latin America tends to be against industrialization it's not just the landlord's that some countries in the recent period have passed suffered from the excessive power of the financial class Brazil and South Africa are the best example since mid 1990s for various that historical and political reasons these two co

untries basically adopted this policy favoring the financial sector over the manufacturing sector and they have consistently had real interest rates running into ten twelve percent which makes an investment impossible you know the average profit rate of non-financial corporations across the world is between three and seven percent if you have to borrow at ten percent we are you cannot borrow him because that you're not going to make enough money to repay it and still have some money left you kno

w in the late 1980s depending on exactly which statistics are you look at the manufacturing sector produce somewhere between 30 and 35 percent of Brazilian GDP today is not even ten percent and falling because when you go and talk to capitalism Brazil they said how can we invest an export we have to pay ten twelve percent real rate that to borrow money our currencies are overvalued at least by fifty percent our exports are not competitive but that does not mean that our country's political econo

my is completely determined by his history because you can always build do political coalition's and let's talk about the United States you know the northern manufacturing states and the southern that agrarian the states were all all the time at daggers with each other about protectionism so sometimes at the northern states managed to impose higher rate of protection when the southern politicians become stronger they pull down protection finally came to a head when Abraham Lincoln the first Repu

blican president actually you know the Republican Party set up just before Lincoln's election made this a bold move but to offer free distribution of public land to settlers in the West so the western states had always have isolated up between the north and the south finally they were fully allied with the northern states and Lincoln could win this yeah and the war settled the thing in favor of the north and since then you know the u.s. became even more protection years started investing a lot i

n infrastructure education R&D that was the critical turning point in the US history in Germany when Bismarck initially ruled Russia Russian politics was dominated by these are landlords well you when he unified Germany he of course I had to listen to this Yonkers but he also realized that he needs to provide protection to these newly emerging heavy and chemical industries the Yonkers were not going to accept protection for these industries so he came up with this at the ideal what later became

known as the marriage of iron and rye human-caused were mainly producing rye he wanted to protect industries like iron so he said ok we are going to protect both of you the Yonkers get protection from new agricultural imports are from the US Argentina Russia which was just beginning to flow flow in that with the development of a steam ships and railways well in return will also protect Heavy Industries that at least for a while worked very well and the U and Germany took over the UK as the supre

me industrial power in Latin American countries that this period of but quite impressive industrialization between the 1930s and 50s were made possible because that some of these politicians like Jet Li of Argos in Brazil Juan Peron in Argentina and Cardenas in Mexico they built this a new political coalition of urban capitalists and workers against the landlords yeah and for a while they provided protection to domestic manufacturing industries and yeah actually they are cheap hi impressive leve

ls of industrialization in say for example 1960 you know South Korea's per capita manufacturing value-added was something I got $20 that in Mexico as a hundred and forty that in Argentina was over two hundred the East Asian countries you know Japan Korea Taiwan they had land reform that got rid of the land Lord clauses soon after the Second World War and then they had these regimes dedicate to industrialization which are basically repressed the financial sector while it lasted basically the whol

e economic policy was geared towards that industrial sector rather than agriculture or financing well second political economy issue is known as the issue embedded autonomy these traumas are invented by the American sociologist Peter Evans who compared industrial policies in Brazil Korea and India and came up with this a conclusion that you need a state that is embedded in society it has to have network and commitment to the society it cannot be kind of made up of this elite who are not really i

nterested in developing the domestic economy and society but this state also needs to have autonomy it has to be able to override sectional interests or certain groups of capitalists so that they can restructure the economy you know push it into new sectors raise productivity successful industrial policy because pragmatism it is the countries that have shown flexibilities in the tools they use that were more successful in achieving their ultimate goals you know most extreme example is that Singa

pore you know ninety percent of land in Singapore is owned by the government 22 percent of GDP produced by state-owned enterprises including the famous Singapore Airlines 85 percent of housing is that supplied by the government own housing corporation called the Housing Board so you know it's an extreme example of a mixture of socialism and capitalism on the one hand you have free trade on the other hand you have 90 percent public ownership of land so I think that this pragmatism is quite import

ant because a lot of policymakers become very ideological and they try to stick to that ideology the world is moving on and you are not adapting to the changes in the world and then we come to the issue implementation capabilities effective policy implementation because capable people but unlike what most people think this doesn't mean hiring more economists now whatever when the World Bank the IMF had when they do capacity building program for policy improvement in developing countries their id

ea is basically to send people to Harvard and Oxford to get a degree in economics well I mean let me tell you the public officials that were behind the so-called East Asia miracle or largely not economists in Japan they were almost entirely lawyers in Korea yeah there were more economists but that they had very high proportional lawyers and some engineers in China in Taiwan they are mostly scientists and engineers and what little economics they knew were not free market economists are not neocla

ssical economics you know especially in Japan thought there's a very strong influence of but economists like Marx Friedrich list and Joseph Schumpeter so they operated with these ideas and basically what makes successful policymakers is different from what makes successful economies these people yeah they need to know some economics but they need to have general intelligence the ability to learn skills to manage complex projects and the ability to maintain organization clearance you know what th

e qualities that are required for good police makers is not the knowledge of economics in also you have to remember that administrative capabilities are not simply possessed by individuals but also by organizations yeah so what kind of command structure do you have what kind of institution routines you have how you keep institutional memories that are what kind of records and Archives - hi how do you rotate people between jobs so that you do not become silos yeah how do interdepartmental Coordin

ation happens these things are far more important and what economy is usually thing and finally you need to design good incentive system for the recipients of industry policy supports they need to be rewarded and punished according to performance there are many cases where the government only gave support and never punished non performance I mean the old regime in India is a classic example you had all these in infant industries not transitioning into becoming other industries but sick industry

isn't so you don't grow up and then you are under protection for 30 40 years and you cannot survive without protection so that's a clear failure of the incentive system for the recipients of your support of course that you need stayed with embedded autonomy it has to be a state that is not hostile to business it has to understand the business world it has to have channels that to discuss things with the business sector but not beholden to it because sometimes you have to make tough decisions and

say well you had all this support nothing has changed we are going to cut this if you can announce the targets yeah if you can announce the performance indicators and if you can announce the measures that you are going to take if things fail to go in the right way in advance it becomes more difficult to manipulate them through lobbying yeah so that was the function or this 5-year plans that was the function of so many industrial policy documents white papers green papers whatever research outpu

ts from government related research institute produced in countries like Japan and Korea and I think a one last comment is that the discussion in this lecture shows how the real world is are much more complex than economic theorists acknowledging it also shows how iconic here is often behind real world practices you know this supposedly new idea of information externality I mean that had been have been practiced in Malaysia for the last 50 years I mean with some mixed success and it also shows h

ow real-world successes and economic policies have often been made without the contribution of economists some may even say that because there was no contribution from economies now I don't that and this lecture in a negative way that are by suggesting that economics is useless but looking at this real-world examples and the analyzing different success cases you have to recognize the limitations of abstract theories and be more humble about what you can tell other people to do you