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Industry and development -- Engine of growth -- Trade and efficiency -- Globalisation and industrialisation -- Technology and industrialisation -- Small scale industry : sink or seedbed? -- Industrial policy and the East Asian miracle -- Giants awakened : India and China.

AbstractThe Lewis model is widely cited, and its implications for the transfer of workers from low productivity to higher productivity jobs have been reflected in recent discussions of 'growth‐retarding' structural change in economies where the manufacturing share in GDP is declining. What is less well known is Lewis's recommendations on industrial policy in the context of low income economies. This paper reviews Lewis's position and links it with contemporary debates on the role of industrial policy and the challenges facing Africa. In relation to specific policy proposals, his emphasis on modest and temporary levels of support (either through trade protection or other means), with government provision of infrastructure and support for training, is now a standard part of policy discussion. Copyright © 2017 John Wiley & Sons, Ltd.

Industrial policy has attracted considerable controversy in the development context. This paper makes a case for a pragmatic and limited approach to interventions as a means of stimulating industrialization in the context of current and future challenges facing newly industrializing economies. It begins with a simple definition of industrial policy, a brief survey of the theoretical case, and a taxonomy of different possible interventions. Recent empirical evidence on the role of industrialization in development is examined, whilst considering how far government policy per se has contributed to manufacturing success. Finally, a series of key issues for today's industrializing economies that industrial policy needs to address are highlighted.

The very rapid economic growth of the People's Republic of China (henceforth PRC), its dramatic success in world export markets and its heavy receipts of foreign direct investment (FDI) have generated much thought and debate in policy and business circles in different parts of the world. This paper surveys evidence from research by ADB Institute staff and Visiting Fellows conducted over the last two years that sheds light on these issues. The paper examines differences in trade structure between PRC and its trading partners, finding that PRC's current structure is closest to that in Korea and Taipei,China in 1990. It also considers changes in market share and finds that PRC exports are eroding the market share of its regional neighbors in the US and Japan, particularly in products in which trading partners are most specialized. There is no evidence of FDI diversion from elsewhere in the region to PRC. The trade diversion effects in the US and Japan are offset however by strong trade creation as the rapid growth in PRC leads to a substantial rise in its imports. The paper surveys the projections of models that demonstrate the gains in greater trade and income for the region from closer trade links with PRC. The broad conclusion that emerges is that whilst there may be risks to individual sectors in all countries concerned, the pattern of regional trade and investment that is emerging is mutually beneficial, provided enterprises and governments in PRC's regional partners respond effectively to the adjustments required.