Productive Development Policies: From Protection to Global Integration

Abstract

A fresh, new look is needed at interventions in factor and product markets, which can often prevent countries from maximizing the gains from trade. Latin America has a long, checkered history of industrial or productive development policies that can be greatly improved if governments follow a strict set of guidelines that target intervention in specific market failures, while offering protection against the usual risks of policy capture by special interest groups. This chapter discusses two classes of policies that do just that. The first is illustrated by Peru?s mesas ejecutivas. The mesas are sectoral, public-private fora that seek to enhance productivity by identifying obstacles to their development (coordination problems, inadequate regulation, insufficient public goods) and rapidly implement the required solutions. The second is illustrated by Argentina s Programa Nacional de Transformación Productiva, which seeks to help transform uncompetitive firms and facilitate the reallocation of workers from uncompetitive firms in uncompetitive sectors to more promising firms in competitive sectors of the economy.