World Bank’s Marcelo Giugale has a new article in the Huffington Post arguing that industrial policy has failed miserably in the past and that the “new industrial policy”, though better than the previous version, is unlikely to work either.

If you are over 50 and grew up in a developing country, fond memories of your family’s car or TV set are surely coming to your mind: it carried a national brand, cost a fortune and broke down all the time.

But industrial policy is back in the agenda:

You’d be surprised. Today, developing countries rich in oil, gas or minerals are desperately looking for policies to diversify their economies, not just because the price of natural resources could unexpectedly tank, but because the business of extraction does not create enough jobs. They have money to invest–think Africa. Even in countries that are doing well, governments are searching for ways to make their industries more high-tech and avoid being trapped half-way up the technological ladder–think Brazil. But everyone wants a new–read, smarter–industrial policy, one that avoids the mistakes of the past. They just might be on to something.

So, will this “new industrial policy”, which sounds less exciting and less revolutionary than its previous version, work? Let’s say that it cannot hurt. If done in the open, private-public collaboration is a win-win. But you are entitled to be skeptic, especially if your government has not been able to deliver simpler services–like a teacher in every class, clean water and a decent police force. That is, if you live almost anywhere in the developing world.

More here (recommended)