Abstract:
Since the global financial crisis, industrial policy is back on the agenda in developing economies after a long break. The renewed
interest in the industrial policy manifested itself in the discussions on the new directions for policymaking. A crucial aspect of
the recent industrial policies is technology policies, in which the developing policies face the trade-off between imitation and
innovation. In this study, we examine the association between industrial policy and state capacity based on a theoretical model.
We elaborate on the successful interventionist industrial policies of the East Asian economies in the past in conjunction with
state capacity and technology policies. As evidence from Korea, Singapore and Taiwan shows simultaneous implementation of
imitation and innovation policies is possible. Recent experience in China further supports this conclusion. The results indicate
that state capacity has played an important role in the success of East Asian industrial policies.