Contrasting Views on Globalisation and Industrial Structure

The nature and determinants of industrial structure are among the most important issues in economics. In the history of economics, there have been radically contrasting views on the basic determinants of industrial structure. For most of the twentieth century, industrial structure was heavily influenced by state industrial policy. Since the 1980s, the end of communist central planning and of inward-looking development strategies in poor countries, together with widespread privatisation and liberalisation, ushered in the epoch of ‘globalisation’. This provides an opportunity to test the validity of the competing views of the determinants of industrial structure under free market conditions.

There is a substantial empirical literature analysing the nature and determinants of industrial structure prior to the epoch of modern ‘globalisation’. However, there is still a dearth of empirical analysis of the nature and causes of the trends in industrial structure in the epoch of globalisation, and of the implications of these trends for both theory and policy. The assembly and interpretation of evidence on this issue is critical for understanding the current epoch.

Mainstream View