World Bank Reverses Stance, Endorses Industrial Policy for Economic Growth
The World Bank, long considered the intellectual center of the Washington Consensus and free-market orthodoxy, has issued a report admitting its previous opposition to industrial policy was mistaken. For decades, the institution argued that state-led efforts to shape economies hindered development, citing the success of East Asian Tigers as proof that market-friendly policies were superior. However, a new report concludes that government intervention, when executed correctly, is an essential component of economic success and should be part of every nation's policy toolkit. This significant reversal challenges the longstanding taboo against industrial policy in development economics. The shift mirrors historical debates regarding the rapid industrialization of South Korea, Taiwan, Singapore, and Hong Kong, where state support for infant industries like semiconductors and automotives played a crucial role. Former US National Security Adviser Jake Sullivan highlighted the magnitude of this change, noting that the primary authority on development economics has conceded that much of the established wisdom on prosperity was incorrect. This move signals a broader global trend towards accepting state intervention as a valid strategy for national economic development.
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World Bank Reverses Stance, Endorses Industrial Policy for Economic Growth
The World Bank, long considered the intellectual center of the Washington Consensus and free-market orthodoxy, has issued a report admitting its previous opposition to industrial policy was mistaken. For decades, the institution argued that state-led efforts to shape economies hindered development, citing the success of East Asian Tigers as proof that market-friendly policies were superior. However, a new report concludes that government intervention, when executed correctly, is an essential component of economic success and should be part of every nation's policy toolkit. This significant reversal challenges the longstanding taboo against industrial policy in development economics. The shift mirrors historical debates regarding the rapid industrialization of South Korea, Taiwan, Singapore, and Hong Kong, where state support for infant industries like semiconductors and automotives played a crucial role. Former US National Security Adviser Jake Sullivan highlighted the magnitude of this change, noting that the primary authority on development economics has conceded that much of the established wisdom on prosperity was incorrect. This move signals a broader global trend towards accepting state intervention as a valid strategy for national economic development.
theatlantic