This Is How Industrial Policy Can Go Bad
Odd Lots
00:00
Engage Beyond Comparative Advantage
Industrial policy challenges the traditional economic view of comparative advantage, which suggests countries should focus on their best-performing sectors as determined by market forces. In this framework, poorer nations are often relegated to labor-intensive and agricultural sectors, which limit their growth potential to lower-profit industries. This situation perpetuates a cycle where wealthier countries dominate the more lucrative sectors, leaving poorer nations with less profitable opportunities and vulnerable to exploitation of their natural resources. Thus, a reevaluation of specialization strategies is essential for the development of poorer countries to escape this cycle.
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