Thus, to holistically consider the issues surrounding effective industrial policy, it is more appropriate to accommodate a set of industrial system ideas based on the reality of practical development-related concerns rather than blindly adopting tenets of industrial policy pronouncements. Clearly, there exists a plethora of perspectives concerning which industrial policies are more suited to the industrial developmental conditions of an economy. One thing for sure is that no policy-makers can be fully aware of a rigid “set of criteria” for industrial policy that gives a national economy pre-eminence in a particular line of business or sector of industry. At best, an industrial policy can encompass elements of both “protecting the losers” and “favouring the winners” to bear some semblance of impartiality in industrial competition. Given the ever-changing economic landscape sweeping today's world, one ponders which industrial policy initiatives should be considered for implementation. For instance, what kind of government-run financial support systems or taxation credits should be provided by the state for industrialisation projects? How should industrial development place emphasis on multi-lateral cooperation amongst banks, private enterprises and employees? Does the government need to lead or actively coordinate efforts to develop new technologies or industries? To make headway along this line of thinking, an industrial policy ecosystem grounded on an institutionalised approach of broad initiatives could be used to analyse whether issues relating to effective policy-making are adequately addressed. Through a comprehensive overview of industrial policy literature, six broad initiatives are conceptualised into an analytical framework, as shown in Figure 2, for an industrial policy ecosystem, which should be tailored to its unique context (Goh, 2004a; 2004b; UNCTAD, 1995; Mejstrik, 1991; OECD, 1990; Cook and Kirkpatrick, 1988)
In most developing nations, there exist market constraints due to one reason or another - which can extend from the national economy as a whole to institutional support systems or even to the enterprise level that constantly need to be facilitated by the state or government. Evidently, even in the best of socio-economic circumstances, industrial policy-making is fundamentally one of enabling the environment for businesses to thrive – which is essentially to create an ideal economic milieu for industrial development. An industrialisation-friendly environment should enable economic agencies, statutory bodies and public sector organisations to embrace and champion rules, regulations and legislation with the objective of moving towards freer, more flexible and market-driven industrial developments. It is thus crucial that an enabling environment be created with certain prerequisites under which industrial developments favourable to businesses can flourish. These include, inter alia , stable socio-political conditions; availability of basic physical infrastructure like public utilities, transportation and telecommunications; institutional infrastructure and mechanisms for mobilising “investible resources”.
The impact of private sector contribution, amongst the developed economies, on the success of a nation’s industrial development that leads to higher levels of production, employment, and productivity, has been significant. Private sector participation in industrialisation not only strengthens the domestic capital market but also increases the financial resources available for economic upgrading. A strong private sector-led industrial development is critical since the private sector should constitute the principal engine of economic growth in any market economy. Moreover, the private sector is also in the best position to determine which industrialisation projects are commercially feasible and to decide which to embark on based on profit-driven motives. It is thus vital to foster private sector expansion for industrial development to flourish under free market forces, with the exception that governmental involvement be stepped up only in specific priority areas where private sector participation is absent, inappropriate or simply lacking. In these instances, the criteria for initiating public sector industrialisation projects should be transparent and be able to withstand public scrutiny.
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