Industrial and Innovation Policy

Aims of the course and definition of the subject

Course web page http://www.econ.ku.dk/okojang/

Perspectives on industrial policy

Precisely defined production factors and techniques. Instead: Human capital the most important factor, i.e.

production factors and techniques are created and changes

Benevolent maximizer of social welfare Instead: A pluralistic model of politics

Illustrative examples of types of Industrial Policy:

Japan and Korea• Infant Industries• Picking the Winners

Germany• Infrastructure• Education and labour market

USA• Mission-oriented policy

The European Union• The Lisbon Strategy

Method for analysing industrial policies

Audretsch (1993)

“/Industrial policy/….The initiation and coordination of governmental activities to leverage upward the productivity and competitiveness of the whole economy and of particular industries….. Industrial Policy ….is the logical outgrowth of the changing concept of comparative advantage”

Commodity and Geographical Composition of UK TradePer cent

Year Export Manu-factures

ImportManu-factures

Export toEurope

ImportfromEurope

1913

1992

75.5

81.9

20.2

78.4

39.5

63.8

44.6

63.7

Source: P Krugman, Brookings Paper on Economic Activity 1:1995

Supertrading Economies:

Country Export, percentage of GDP, 1990

Singapore 174

Hong Kong 144

Malaysia 78

Belgium 70

Ireland 64

The Netherlands 52

Source: P Krugman, Brookings Paper on Economic Activity 1:1995

Premises of the course:

• Policies that give leverage to the competitiveness of the whole economy or of particular sectors

• Evolutionary Economics: Schumpeterian competition and bounded rationality (routine and institutions)

• Political Economy: institutions for negotiations and lobbyism linking markets and politics

• European integration: “multi-level governance”

Course Outline Spring 2008:

Course web page http://www.econ.ku.dk/okojang/

Absalon: Upload your seminar papers here

Section 1: Introduction and background6.1 Aims of the course and definition of the subject. Audretsch (1993)..7.2 Seminar: State and market: University-industry partnerships. Section 2: Industrial economics and implications for policy Section 3: Innovation and Industrial Evolution Section 4: Innovation Policy