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The present study reviews a diverse set of countries with the most successful industrial policy experiences since the Second World War – namely, the US, Germany, Japan, Italy, Finland, (South) Korea, Singapore, China, and Brazil – with a view to deriving lessons for the UK.
In section 1, we start by reviewing the current state of the manufacturing sector in the UK, especially, although not exclusively, comparing it with the nine countries whose industrial policy we review in this state. The picture that emerges is an alarming one, in which the UK’s industrial performance distinguishes itself for being poor and is still declining further.
In section 2, we discuss some of the key theoretical issues in the debate on industrial policy. We discuss: (a) different definitions of industrial policy, especially focusing on the relationship between and the relative merits of ‘horizontal’ (or ‘general’) and ‘vertical’ (or ‘selective’) industrial policies; (b) the special role of the manufacturing sector in the overall economy, especially as the source of productivity growth, innovation, learning, and resilience; (c) main theoretical justifications for certain notable industrial policy tools and institutions used in the countries reviewed.
In Section 3, we review the industrial policy experiences of the nine comparator countries. While historical material dating back from the 18th century is covered when appropriate, the focus is more on the recent period, since the 1980s or the 1990s, depending on the country.
In Section 4, we draw lessons for the UK’s industrial policy from the nine country experiences that we review in Section 3, filtered through the theoretical discussions provided in Section 2. We draw the lessons along several dimensions: (a) the role of ‘vision’; (b) institutional settings (e.g., coordination within the government, the role of surrounding institutional networks); (c) finance and corporate governance; (d) promotion of innovation; (e) management of transnational corporations (TNCs); (f) support for SMEs; (g) skills and training.
In Section 5, we look ahead for the future of the UK’s manufacturing sector, taking into account our theoretical discussions, country case reviews, and the lessons we have drawn from those discussions.
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