Modern Industrial Policy and Public-Private Councils at the Subnational Level: Empirical Evidence from Mexico

Abstract

In recent years, there has been renewed interest in the use of industrial polices. The need for modern industrial policies has been increasingly acknowledged in the literature and by the praxis of developed and developing countries, including much of Latin America. Whether a country should have an industrial policy is no longer in question; rather, the issue is how to do it right. Nevertheless, research is still incipient on the experience with the specific institutional arrangements and governance structure required for effective modern industrial policy and the form that such institutions should take. This is especially true in large countries with developed subnational governance structures. One institutional mechanism considered vital to effective modern industrial policy is the modality of public-private dialogue and problem solving that supports a search for obstacles and solutions to agreed development objectives. This paper addresses industrial policy in general, but especially at the subnational level, with new empirical evidence from a large federal state: Mexico. It presents a detailed analysis of the governance of 32 newly created public-private State Productivity Commissions (Comisiones Estatales de Productividad, or CEPs). The analysis also is informed by new research on the longer experience of subnational public-private councils in Colombia's national system of competitiveness and innovation.