Designing An Industrial Policy For Developing Countries: A New Approach

TL;DR

This paper critiques traditional industrial policy design in developing countries, proposing a new approach based on Schumpeter's growth theory to improve theoretical consistency and effectiveness.

Contribution

It introduces a novel industrial policy framework aligned with endogenous growth theories, emphasizing data-driven analysis and process design.

Findings

Classical methods conflict with endogenous growth goals

Proposed approach ensures theoretical consistency

Enhanced targeting of growth stimulants

Abstract

In this study, the prevalent methodology for design of the industrial policy in developing countries was critically assessed, and it was shown that the mechanism and content of classical method is fundamentally contradictory to the goals and components of the endogenous growth theories. This study, by proposing a new approach, along settling Schumpeter's economic growth theory as a policy framework, designed the process of entering, analyzing and processing data as the mechanism of the industrial policy in order to provide "theoretical consistency" and "technical and Statistical requirements" for targeting the growth stimulant factor effectively.