« « Plan versus Market Explanations in Computer Industry

Plan versus Market Explanations in Computer Industry (2)

In the neoclassical view, a country’s success in a particular industry such as computers results from the actions of the private sector—companies—rather than from the targeted industrial policy of governments.

A recent version of this neoclassical approach is the World Bank’s analysis of the economic growth of the East Asian economies.13 While acknowledging that many of the East Asian economies intervened substantially and selectively in different industries, the World Bank analysis argued that these interventions had no demonstrable positive contributions to industrial performance, or that they had been market friendly, that is, led to the right market prices.

In contrast, revisionist political economics argues that the success of the East Asian countries is better explained in terms of selective state intervention n industry development.14 This view argues that countries may succeed in achieving high overall performance by targeting strategic industries, such as the computer industry, for promotion.

Strategic industries are chosen for their long-term growth potential and for their strategic linkages to other sectors of the economy. Revisionists claim that government intervention can overcome market failures and attract investment into risky new ventures.

Targeted industrial promotion can also support the accumulation of assets and capabilities that will provide long-term competitive advantage vis-a` -vis other countries.

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