Paradigms of development: The East Asian debate

This paper contrasts the ruling neo‐classical “paradigm” on industrial policy with a more structuralist view of the need for government interventions to promote industrial development. It traces the evolution of the debate on industrial policy from the early days of planning to the current consensus for “market friendly” policies, and notes the deficiencies in the latter approach. It develops a casefor selective interventions basedon the nature of the technological learning process and adduces evidence from the East Asian newly industrializing economies to show that the nature and extent of selective interventions were critical to their patterns of industrial development. It closes with an acknowledgement of government failure but argues that this does not amount to an absolute and permanent case against industrial policy.