Infant Industries and Industrial Policy: A Lesson from South Africa

The debate on industrial policy is often counterposed between two truisms. On the one hand, market-based resource allocation is clearly important - it is not nations which compete, but individual firms. On the other hand, firms operate in the context of 'created endowments' such as physical infrastructure and the education and training of their labour forces. Consequently, competition amongst them occurs in the context of national endowments that are open to augmentation by government action (Reich, 1991). These two positions are often used to reflect an ideological divide between those who believe that government should allow industry to pursue the path that it alone knows best, and those who believe in a comprehensive role for government intervention in industrial resource allocation. However, a reasoned assessment of international experience points to two central conclusions. Firstly, there are very few cases where sustained industrial growth has not involved a key for government. And, secondly, the effective role played by governments has to be moderated by the individual historical and strategic circumstances of each country.

  • Authors: Raphael Kaplinsky and Edmund Mhlongo
  • Year: 1997
  • Organisation: University of Cape Town and University of Sussex
  • Publisher: Transformation 34
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