“Japanese collectivism” was criticized most fiercely in the field of economy during the U.S.-Japan trade friction. The Japanese economy was alleged to be collectivistic at three levels: At the company level, Japanese workers were alleged to be loyal to their companies and thus willing to work unusally long and hard. At the company group level, Japanese complanies were alleged to form a closed group (called keiretsu) that worked as a barrier against foreign competitors. At the country level, all Japanese companies were alleged to act like a single company (“Japan Inc.”) under the direction of the Japanese government. However, economic statistics and empirical studies disclosed that all these alleged properties of Japanese economy were unreal. For example, surveys almost unanimously revealed that American workers were more loyal to their companies than Japanese workers. Although Japan was allged to protect its domestic market against American products by means of non-tariff barriers, each Japanese paid as much for American products as each American paid for Japanese products. The disputed trade imbalance was actually created by the difference in population between these two nations.

Introduces the economic crisis that the US is currently experiencing and the reasons why industrial policy is the right solution to it.

In this chapter, I explore the imaginaries of prosperity underlying the European Union’s (EU) approach to industrial law and policy. Long considered a taboo in European politics, the EU began to rediscover industrial policy after the 2008 great financial crisis, gradually increasing its ambitions when it came to shaping the relations between the state and the market. Having reviewed an array of EU measures, starting with the 2010 industrial policy and including the more recent burst of legislative proposals (Chips Act, Batteries Act, Critical Minerals Act, and Net Zero Industry Act), this chapter aims to do two things. First, it identifies shifts in the background understanding of political economy, including the role and appropriate objectives of markets, politics, law, and government, that lie behind successive policy interventions. Second, this chapter sketches the contours of the new synthesis of prosperity that emerges from these recent proposals and measures, while at the same time, and in no ambiguous terms, drawing attention to its considerable limitations.

Lists the policy recommendations the authors draw from the analysis of the book, both for their practical value and to further elucidate that analysis.

This chapter first argues that the disagreement between advocates and opponents of industrial policy is actually a disagreement between the two different market theory paradigms. One is the “neoclassical economics paradigm” and the other is the “Mises–Hayek paradigm.” The chapter then analyzes the challenges faced by industrial policy from the perspectives of both cognitive limitation and incentive distortion. The basic conclusion is that industrial policy is destined to fail. Ignorance of entrepreneurship is the fatal weakness of industrial policy advocates. The two primary justifications for industrial policy are “externalities” and the “coordination failure” of the market. With a correct understanding of entrepreneurship, however, these two justifications are untenable. The chapter also argues that the “comparative advantage strategy” of a nation is endogenously created by entrepreneurs, not determined by so-called “endowments.”

State aid law controls public spending by Member States by prohibiting aid which damages the internal market and encouraging spending on projects of interest to the EU economy. The Court of Justice plays a central role in delimiting the scope of application of State aid law. The Commission has extensive powers to investigate State aid and may order recovery of funds that are granted illegally. This remedy harms the beneficiary but does little to deter the Member State granting aid. The Commission has been successful in reducing the grant of State aid and encouraging States to fund certain types of State aid which contribute to the EU’s emerging industrial policy. Moments of economic chaos like the financial crisis in 2008 and the Covid-19 pandemic led to a significant relaxation of State aid discipline but the Commission used these two crises to press for further economic integration in the form of the Banking Union and the Recovery and Resilience Facility respectively.

This chapter redefines the Korean model of catch-up development, based on an evaluation of the existing theories. The “Korean miracle” happened not owing to any favorable initial conditions but rather in spite of several disadvantageous conditions. Moreover, overcoming these obstacles required government initiatives, including various forms of industrial policy. We also noted that inclusive institutions did not precede economic growth. Rather, capability building for economic growth proceeded under political authoritarianism, and the resulting economic growth at a later stage brought about political democracy. The two pillars of the Korean miracle were short-CTT sector specialization led by domestically owned and export-oriented conglomerates, in strategically navigating global–local interfaces. Longer-term evolution of Korea’s economic development has involved detours in two senses. First, it has been a detour from dominance by big businesses to decentralization alongside the emergence of SMEs. Second, it is a transition from short- to long-CTT sectors. In this sense, the Korean experience is an exemplary case of an innovation–development detour, namely a detour from short- to long-CTT specialization led initially by export-oriented, indigenous conglomerates, followed later by SMEs.

This chapter discusses the importance of technological progress for achieving climate goals and how innovation, industrial and competition policies can work as powerful engines to spur decarbonisation and what it would take to ensure that the decoupling of economic growth from greenhouse gas emissions occurs at the speed necessary to reach climate neutrality by 2050.

In this chapter, the key findings and arguments of the previous chapters are combined into a synthesis. This ‘institutional diagnostic’ not only provides an account of the most important institutional issues facing Bangladesh but also seeks to identify the complex chains of causality which relate them both to the economic outcomes that they generate and to the proximate causes and deep factors from which they derive. It begins with a summary – firstly of the historical and political context and then of the more specific findings that have emerged from the thematic studies. From this, three basic institutional weaknesses are identified, each of which recur multiple times in the thematic studies – the supremacy of the ‘deals environment’, ineffective regulation, and weak state capacity. In each case, it is explained both how these institutional factors constrain economic development and how they derive from and indeed maintain the political economy context and other deep factors. Some key directions for reform are identified together with a discussion of where the political barriers to implementing them may lie. Some further reflections are made on impact of the COVID-19 pandemic.