While studies have been undertaken to better understand the impact of industrial policy, most of the literature continues to offer limited guidance to effective industrial policy-making. With the success of the developed world, policy makers and central planners have strongly supported a greater role for interventionist industrial policies as models of industrial development for developing nations. Although an “interventionist model” of industrial development is the policy of most countries of the world, including countries such as the United States which prides itself as a “free-trading” nation, the real nature of state intervention is still being disputed. For instance, some critics oppose industrial policy intervention in the domain of the private sector and strongly discredit its relevance because it is viewed as unnecessary and fruitless, since industries are already initiating industrialisation projects on their own and are in the best position than the state to do so. This article has thus undertaken two steps to bridge the knowledge gap. One, it took a closer scrutiny at how issues should be addressed by contemplating an industrial policy ecosystem based on an institutionalised initiative-based approach as an analytical framework to identify, appraise and critique policy alternatives. Two, it has argued in support of a “selective interventionist model” by adopting a strategic stance of industrial development based on refraining from resource accumulation, state involvement or direct participation, and diminished competition or distorted influence of market forces. The proposed framework was employed to examine the case of Singapore whose adopted industrial policies were based on relatively sound initiatives. However, as to how the country would perform in the next decade of industrialisation remains to be seen; and should be best left to industrialists, academic researchers and businessmen to judge for themselves what the country would accomplish within the wider context of the current industrial policy debate. Notwithstanding the rising economic uncertainty caused by natural disasters, terrorist threats and communal health crises, it was also recognised that the most effective form of industrial policy should be flexible, responsive and adaptable to changing conditions and opportunities. New strategic issues, as they surface, could then be raised to further extend understanding on effective industrial policy, in particular, on how government’s role could be better facilitated.
In conclusion, for future exploration, three challenges facing industrial policy-makers which merit attention are identified. Firstly, for the benefits of effective industrial policy-making to be felt, it is noted that policy execution is key. The first challenge lies in forming a capable bureaucracy proficient in responding to fast, uncertain and ever-changing demands of industrial development to allow for industries to participate more fully in the international arena of trade and investment. Secondly, as the industrialisation process involves the utilisation of various types of technologies, processes, techniques, organisational, social and different forms of codified knowledge, it requires the joint and concerted efforts of individuals at all levels. The second challenge lies in ensuring that the policy imperatives of industrialisation permeate all layers of society and organisation. Thirdly, although the main purpose of industrial policy-making is to aid economic development, one should refrain from perceiving it as the "magic cure" for ailing economies. The fewer industrial policies a national economy requires, is also a reflection that its country’s economic policies have taken care of the country's industrial policy imperatives. The third challenge posed to the government thus involves one of balancing between the two extreme approaches of “hands-off inaction” and “weighty interference”, but instead one based on well-reasoned selective intervention.
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