Domestic Industrial Policy Research Articles

Artificial intelligence as planetary assemblages of coloniality: The new power architecture driving a tiered global data economy

We present a framework for viewing artificial intelligence (AI) as planetary assemblages of coloniality that reproduce dependencies in how it co-constitutes and structures a tiered global data economy. We use assemblage thinking to map the coloniality of power to demonstrate how AI stratifies across knowledge, geographies, and bodies to influence development and economic trajectories, impact workers, reframe domestic industrial policies, and reconfigure the international political economy. Our post-colonial framework unpacks AI through its (1) global, (2) meso, and (3) local layers, and further dissects how these layers are vertically integrated, each with its horizontal dependencies. At (1) the global layer of international political economy maps a new digital bipolarity expressing Sino and American global digital corporations’ strategic and dominant positions in shaping a tiered global data economy. Then, at (2) the meso layer, we have a mosaic of domestic industrial policies that fund, frame markets, and develop AI talent across industries, sectors, and organizations to competitively integrate into AI value chains. Finally, incorporating into these are (3) the localized labor processes and tasks, where workers and users enact various AI-mediated tasks and practices driving further value extraction. We traced how AI is an interlaced system of power that reshapes knowledge, geographies, and bodies into dependencies that reinforce stratifications in developing underdevelopment. This commentary maps the current digital realities by laying out an uneven techno-geoeconomic power architecture driving a tiered global data economy and opening new research avenues to examine AI as planetary assemblages of coloniality.

The global conditions of China's economic development: How does globalisation affect China in the context of Kornai's Frankenstein metaphor?

AbstractThe objective of this study is to identify how globalisation influences China and how China affects globalisation in the context of János Kornai's Frankenstein metaphor. Kornai (2019) felt moral responsibility for unwillingly contributing with his advice in the 1980s to the birth of a modern version of Frankenstein, the Monster which his creators could not control. A crucial guiding principle of this paper is how the US and the advanced democratic economies can respond to Kornai's dilemma and reconcile the diverging requirements of economic interests with national security priorities. There is a research gap in the systematic mapping of the external economic environment on China's development. The primary conclusion of this paper is that China is less dependent on the rest of the world than the world on China. As the de-risking concept suggests, trade restrictions and domestic industrial policy measures focused on a narrow range of strategic sectors should be combined with unlimited trade and cooperation in the remaining non-strategic sectors. This study's conceptual and methodological framework can be used to analyse the relationship between advanced democratic economies and autocratic regimes in Kornai's Frankenstein dilemma.

Domestic Investment Incentives in International Trade Law

AbstractDomestic Investment Laws (DILs), a prominent tool of contemporary unilateral International Economic Law (IEL) in the context of the Liberal International Order (LIO), consistently provide for investment incentives as a key aspect of domestic industrial policies geared to influence investment location decisions. The various types of investment incentives include fiscal measures to attract investment, direct subsidies, and other regulatory measures aimed at creating favorable administrative and regulatory conditions for investment. This article analyzes how the provisions of the World Trade Organization (WTO) Agreements contain basic disciplines and set limitations for the distortive effects of investment incentives. It is argued that the relevance of WTO law for domestic investment incentives should not be under-stated; rather, DILs providing investment incentives should be treated as a limited exception to the ongoing move from international to domestic in the era of the LIO.

Export-Share Requirements vs. Production Taxes under Duopoly with Differentiated Products: A Conjecture Variational Approach

One commonly held belief, as shared by some trade theorists, suggests that trade policy is inferior to domestic industrial policy as an interventionist device. This paper compares the output level on domestic market between production taxes and export-share requirements. Two firms, one domestic and one foreign/export firm, compete in a domestic market where products are imperfect substitutes of each other, while the foreign/export firm also supplies a portion of its output to foreign market. When tax rate is positive and conjecture variation is centered around Cournot, domestic output under export-share requirements will be higher than under production taxes. The values of conjecture variation that are centered around Cournot are bounded within an open interval, with its upper and lower bound determined by four factors: tax rate and export share, domestic output of firms under the tax regime, and the degree of product substitution.

Public administration and national industry policy: feature of foreign experience, principles of rational interaction

The article describes the main trends in the implementation of the state industrial policy abroad. Examples of the USA and China are given. The increasing role of state regulation in industrial development is noted. The US experience in improving strategic state planning is considered. The priority directions of China's industrial policy are characterized. The necessity of improving the principles of formation and implementation of the domestic industrial policy in the conditions of its continuing raw materials orientation is emphasized. The issues of improving the quality of institutional regulation of industry are described in detail. The necessity of linking the development of the industrial sphere with demand forecasts and national security strategies is justified. The problems of choosing the priorities of industrial development, as well as the requirements for participants in the formation and implementation of industrial state programs are considered. Recommendations on the formation of an active and balanced industrial policy are given. The key aspects of industrial policy that need to be taken into account in the formation of the public administration system are described.

Financial Services Trade in Special Economic Zones

ABSTRACT The mushrooming of special economic zones (SEZs) in recent years has led to a significant increase in the supply of attractive incentives for investors looking for opportunities abroad. Special economic zones are self-contained regimes, inextricably associated with investment promotion policies and domestic industrial policy in general, that many times form part of a broader strategic governmental planning that aims at experimenting with economic rule-making in strictly defined territorial and jurisdictional boundaries. While empirical evidence is still inconclusive, special economic zones can contribute to economic development at the domestic level through a varying degree of channels. This is even more the case with services-only special economic zones, a new phenomenon that exemplifies the rising importance of trade in services but also the ‘servicification trend’ that drives global economic activity. Against this background, this article examines the case of services in special economic zones and offers a tour d’horizon of the current services-related special economic zone landscape. Furthermore, the article critically reviews the patterns, traits, and limits of trade in financial services within special economic zones and discusses the relevance of the General Agreement on Trade in Services at this juncture. It concludes with a discussion of potential development-related benefits ensuing from trade in financial services within special economic zones.

VR/AR 전문 인력양성방안 연구 - 국내 산업정책 현황 분석과 해외사례분석을 통한 비교분석 -

실감 형 콘텐츠 시장은 2023년까지 국내시장이 약72조 2천억원, 세계시장이 약 2,692 억 달러로 급성장할 것으로 전망되는 가운데 VR · AR 관련사업 또한 크게 확산되고 있다. 산업 조기 활성화를 위해 정부의 적극적 육성 정책과 함께 5G통신사 중심으로 콘텐츠와 서비스에 집중 투자 중이나 글로벌 수준의 VR · AR 플랫폼의 부재와 5G상용화 이후 지속적인 통신인프라 확충 및 가입자 증가에도 불구하고 VR · AR 응용서비스 및 HW투자는 세계시장 대비 미비하다. 또한 관련 산업기술 인력 부족과 미래선도 전문 인력수급 또한 시급하다. 신산업분야 실감경제 인력현황을 보면 반도체, 디스플레이, IOT가전, VR · AR, 첨단신소재 등의 5개 신산업 분야에 2027년까지 18만 5000여명이 필요하다.<BR> 현재 혁신성장 사업으로서 VR · AR 산업정책을 추진 중이나 관련분야 인력 수요 및 인력양성 교육에 있어서 체계적인 운영 안과 구체적인 지원방안이 확립되어야 한다. 혁신적인 미래주도 인재양성을 위해서 본 연구는 현행 산업정책 기반 VR · AR 전문 인력양성사업의 문제점을 검토하고 국외 교육지원정책과 교육프로그램을 분석하여 다음과 같은 결과를 도출하였다.<BR> 첫째, VR · AR 의 큰 부가가치를 창출하기 위해서는 기존 산업과의 접목이다.<BR> 둘째, 재정적인 지원구축과 공식적인 네트워킹을 마련해야 한다. 공공지원뿐 아니라 민간 네트워크를 활용한 다양한 분야와의 협력체계를 구축해야 한다. 또한 산업체와 교육기관, 연구소 등의 아이디어 및 경험공유, 기술과 재정적 지원 등을 위한 네트워크의 장을 마련하여 실시간으로 서로 소통해야 한다.<BR> 셋째, 다 학제와의 융합교육이 이루어져야 한다. 이는 타 전공자들과의 협업도 의미한다. 교육 커리큘럼 자체가 전공자, 비전공자 모두에게 오픈되어 혁신적인 아이디어를 구성할 커뮤니케이션이 이루어질 수 있도록 교육 프로그램이 개발 재편성 되어야 한다.<BR> 마지막으로 VR · AR의 전문가 배출을 위한 수업의 질을 개선해야 한다. 실무능력을 배양하기 위해 교육장의 단계별 확보와 최신장비 보유를 위해 정책적으로 지원을 통한 방법과 공간과 장비를 공유하는 네트워크를 구축하여 기관, 학교, 연구소등의 교육수준의 평준화가 이루어 질 수 있도록 체계를 모색해야 한다.<BR> 산업인력 양성교육은 단기적인 교육이 아닌 미래산업을 주도하는 인재를 개발하는 중요한 사업으로 국내 실정에 맞게 체계적이고 구체적인 교육 운영 안개발을 이루어져야 한다고 생각하고 후속연구에서 구체적인 커리큘럼 제안연구를 해나가도록 하겠다.

The impact of the economic crisis on Indonesian palm oil exports: a long term simulation analysis

This study aims to analyze the impact of the economic crisis on Indonesia’s palm oil exports. The relationship between factors in palm oil trade was analyzed using the simultaneous equation system model and estimated using the Two-Stage Least Square (2SLS) method. This research uses time-series data (years 2000 - 2018). The results showed that Indonesia’s economic growth contracted up to 5.32% leading to an economic recession due to the Covid-19 pandemic and the United States-China trade war which caused Indonesia’s palm oil exports to decline significantly. However, the increase in domestic palm oil consumption is thought to be due to lower palm oil prices and the implementation of domestic industrial policies. In this condition, the depreciation of the rupiah (11%) and the reduction in import tariffs for palm oil from trading partner countries are predicted to be able to improve the performance of Indonesia’s palm oil exports, but still low in net compared to conditions of average economic growth. This proves that the reduction in export tariffs (Indonesia) and import tariffs (trading partners) during the depreciation of the Rupiah due to contraction in economic growth can improve the performance of Indonesia’s palm oil exports.

Financial Services Trade in Special Economic Zones

The mushrooming of Special Economic Zones (SEZs) in recent years has led to a significant increase in the supply of attractive incentives for investors looking for opportunities abroad. SEZs are self-contained regimes, inextricably associated with investment promotion policies and domestic industrial policy in general, that many times form part of a broader strategic governmental planning that aims at experimenting with economic rule-making in strictly defined territorial and jurisdictional boundaries. While empirical evidence still is inconclusive, SEZs can contribute to economic development at the domestic level through a varying degree of channels. This is even more the case with services-only SEZs, a new phenomenon that exemplifies the rising important of trade in services but also the ‘servicification trend’ that drives global economic activity. Against this background, this article examines the case for services in SEZs and offers a tour d’horizon of the current services-related SEZ landscape. Furthermore, the article critically reviews the patterns, traits and limits of trade in financial services within SEZ and discusses the relevance of the General Agreement on Trade in Services (GATS) at this juncture. The article concludes with a discussion of potential development-related benefits ensuing from trade in financial services within SEZs.

The Limits of Liberalization: WTO Entry and Chinese State-Owned Firms

Does state ownership reduce the effectiveness of trade agreements? We examine the case of China, which is not only the world's largest trading nation but also lends active support to its state-owned enterprises (SOEs), potentially distorting global trade. Using Chinese import data disaggregated by firm ownership, we analyze how state-ownership conditions the response to entry into the WTO. We demonstrate that after WTO entry, tariff cuts have a larger effect on private compared to SOE trade. We then show that state ownership alone does not block the liberalizing effects of the WTO. For most industries, SOEs display a commercial orientation that is similar to private firms. However, where strategic goods targeted by industrial policy hold a large share of bilateral trade, lowering tariffs has no impact on SOE trade. In short, the effect of WTO liberalization depends on the countervailing force of domestic industrial policy, rather than state ownership alone.

Foundations of industrial policy in the countries with different levels of development: lessons for Ukraine

Relevance of the research topic is due to the need of developed and developing states of the world in renaissance and improvement of industrial policy as a key instrument of economic development strategy in a globalizing world. Formulation of the problem. The efficiency of industrial policy in countries with different level of development depends on the fact how principles the policy is based on take into consideration the starting national conditions and requirements and trends of global market. For the countries with the same levels of income it is possible to determine the common directions of industrial development strategies and efficient tools of industrial policy. Under similar starting conditions differences in approaches to industrial policy may also determine the differences in results of its implementation; under different starting conditions they can entail the smoothing out of economic performance and a rapid convergence of economies.Analysis of recent research and publications. Some issues on industrial policy implementation in the countries of the world were investigated by both domestic and foreign scholars: A. I. Amosha, A. Andreoni, K. Warwick, V. P. Vyshnevsky, V. M. Heyets, G. Cresti, J. Lin., V. I. Liashenko, A. Noman, I. Nubler, K. Ohno, H. alazar-Xirinachs, E. Starikov, J. Stiglitz, V. Treichel, K. Shwab. Selection of unexplored parts of the general problem. In spite of the multiple attempts to generalize the approaches and instruments of industrial policy for groups of countries the search of optimal design of industrial policy is still going on, what makes the adoption of important industrial development regulations complicated and is the reason of bitter discussions between the branches of authorities in the course of formation of Strategy of Ukrainian industrial complex development, legislative regulation of «industrial visa-free» and export duties on some types of feedstock. Setting the task, the purpose of the study. The purpose of the study is generalization of the experience of industrial policies in countries with different levels of economic development and justification of the need to use it in setting the basic principles of domestic industrial policies. Method or methodology for conducting research. In the research we used general and specific scientific methods of analysis, synthesis, induction and deduction, historical, comparison, dialectical method of knowledge; also methods of statistical analysis, monographic research for countries’ experience, expert assessment method for elaboration the recommendations on industrial policy implementation in transformation economies. Presentation of the main material (results of work). The industrial policy of three groups of countries – with high, middle and low income – are studied due to their historical development. Socioeconomic and institutional conditions of countries, where the implementation of a certain type of industrial policy had positive or negative results, were determined. The analysis of the Ukrainian industrial performance and industrial policy showed that the policy should be revised according to the relevance of instruments and measures to the challenges of internal and global environment. The priority directions of industrial development are determined and the key principles of industrial policy in Ukraine are justified based on foreign experience. The field of application of results. The results of this research can be applied in the process of industrial regulatory framework formation, in the Concept of state industrial policy and the Strategy of industrial development elaboration by central executive authorities, and in the preparation of relevant sections of programs of regions’ socioeconomic and cultural development. Conclusions according to the article. In the study it is determined that these are the protectionism measures and innovation activity stimulation which are the base of the modern industrial policies in the countries with a high level of development; the middle-income countries should prioritize innovation and technology policies; the low-income states including Ukraine should focus on industrial modernization, import substitution, and the integration into global value chains in order to accelerate their socioeconomic development and strengthen the competitiveness over the world markets.

More Catholic than the Pope? Europeanisation, industrial policy and transnationalised capitalism in Eastern Europe

ABSTRACT European integration has reshaped the space for domestic industrial policies, foreclosing protectionist strategies, and instead promoting liberal industrial policies aimed at creating an integrated and competitive European market. Such Europeanisation proceeded further in East European states, which display more transnationalised growth models and rely on EU compliant industrial policies more than the West. The paper argues that the EU enlargement strategy played a key role in this Europeanisation, through a combination of conditionality, financial assistance and institution building. The EU helped tilt the domestic political balance in favour of development strategies based upon foreign direct investment (FDI) and it increased the capacities of East European states to use generous and EU compliant state aid as a key industrial policy tool. The resulting economic transnationalization locked-in policy transformation. While rising economic nationalism challenges such transnationalization at the margins, the core of East European growth models and industrial policies persist years after accession.

Kazakh Land, China Capital: Exporting China’s Project System to External Geographies

China’s Belt and Road geoindustrial policy is dependent on upgrading transport logistics throughout the Middle East and the former Soviet Republics of Central Asia. However, the key International Capacity Cooperation policy also aims to move industrial plants abroad in support of China’s wider import strategy. Planning this industrial offshoring not only requires significant domestic industrial policy governance coordination, with policy being formed at the center and transmitted to lower levels of China’s administrative hierarchy, but also involves traversing largely unmapped policy territory, namely international multilevel governance cooperation with host countries in Central Asia. Taking the International Capacity Cooperation policy as its focus, this paper examines China’s geoeconomic industrial policy in Kazakhstan, arguing that greater public administration interdependence is needed to develop China’s foreign policy into genuine regional economic cooperation.

Services traded for intermediate and final usage

PurposeThe purpose of this paper is to investigate and assess the trends of bilateral services trade in the world segmented by trade for final consumption and intermediate usage across several service sectors. The differential trends, if any, are studied while examining the role of free trade agreements which have a chapter on services trade as well as the role of services trade restrictions. The study unravels differences across service sectors in this respect.Design/methodology/approachThe author uses an augmented gravity model to address the above using OECD- World Trade Organization (WTO) TiVA data for bilateral trade in intermediates and final products (October 2015 release) and World Bank Services Trade Restrictions Index (STRI). The poisson pseudo maximum likelihood estimation technique is used in light of the structure of the data. Trade creating and diverting effects are identified controlling for time and country-time specific effects. The following sectors are specifically looked at: total business sector services, computer and related services, financial intermediation, post and telecommunication, transport and storage, R&D and other business services, hotels and restaurants, construction, and wholesale and retail trade.FindingsFirst, services free trade agreements (FTAs) have had a trade creating impact with no trade diverting impact for services trade in aggregate with stronger effects on services traded for intermediate usage. Second, financial intermediation and post and telecommunication have been left unaffected by services FTAs. While no trade diversion is concluded for any sector, R&D and other business services, transport and storage and wholesale retail trade show maximum trade creation effects in response to FTAs. Third, trade restrictions of mainly OECD countries are responsible for lowering exports for most sectors. Finally, in terms of policy implications, at a general level, the author does not find a significant difference in the author’s results for services traded for intermediate usage or final consumption except for a stronger effect of FTAs on intermediate services trade. Hence, the policies to foster services trade on both counts are concluded to be the same and deal with behind-the-border policies of domestic industrial policy reforms like national treatment of foreign firms, licensing requirements, FDI policies, etc.Research limitations/implicationsStatistics for services trade are limited. The data are only available for the years 1995, 2000, 2005, 2008, 2009, 2010 and 2011. Additionally, the conclusions on services trade restrictions are based on statistics for 2011 alone, since this is the only year for which the statistics are available. A complete time series for the entire sample period would increase robustness of the study with a better time variant version of the trade restrictiveness variable. Finally, in the construction of the OECD-WTO-TiVA database of a world IO table, there may have been approximations in constructing statistics for services traded for intermediate usage and final consumption. The results remain sensitive to the same but this is the best possible statistics available for the purposes.Originality/valueThis is the first study which looks at services trade segmented by trade for final consumption and intermediate usage taking advantage of the available data for a number of service sectors. The role of restrictions is also studied for the first time segmented by trade in intermediates and final consumption. The stronger effects of FTAs on intermediate services trade as well as financial intermediation and post and telecommunication services being insulated from effects of FTAs are important findings, especially since services are mainly thought to be traded for final consumption. Similar trends of results for services traded for intermediate usage and final consumption and restrictions affecting exports from exporter countries and imports by importer countries highlight the importance of behind-the-border domestic policies in facilitating or inhibiting services trade on both counts and more importantly for intermediate usage which, in turn, would improve goods tradability.

Death of the East Asian Goose and the Rise of China’s Geoindustrial Policy

China’s Belt and Road Initiative and its associated domestic industrial policies represent a parallel trade and investment strategy that challenges the Akamatsu principle of the Flying Geese pattern of industrial development in East Asia. This paper is positioned against the dominant orthodox theory of national systems of industrial development in East Asia. It argues that China’s trade and industry policy in the 2012–2017 period has demonstrated that government will expand its industrial policy market intervention rather than retract, moving away from the regional economic integration order by moving industrial production and import trade away from the Asia-Pacific along a Westward axis to the Indian Ocean and Eurasia. Implications are that the emergence of China’s geoindustrial policy will subvert multilateral trade norms as China begins to institutionalise its external trade and industrial policies.

Welfare effects of state-owned multinational enterprises

PurposeThe purpose of this paper is to theoretically investigate the potential welfare effects of state-owned enterprises’ (SOEs) international operations.Design/methodology/approachThe paper is conceptual, applying standard economics state ownership theory based on agency theory and incomplete contracts theory to different forms of SOE cross-border operations.FindingsWhen private firms are risk averse or financially constrained, or when writing complete contracts and making credible commitments are not possible, state ownership can achieve objectives such as international operations supporting domestic industrial policy, addressing social objectives in another government’s territory and addressing transnational market failures. Welfare effects may, however, also depend on home-host country relationships.Originality/valueThis is the first application of standard economics state ownership theory to state-owned multinationals. The analysis shows that key conclusions from the state ownership literature in a domestic setting can be extended to international operations, and highlights new theoretical issues arising from SOEs going beyond their home jurisdiction to that of another government.

International Capacity Cooperation—Financing China's Export of Industrial Overcapacity

AbstractInternational capacity cooperation (国际产能合作) exports China's Keynesian project system, offshoring its excess industrial capacity as fixed‐capital investment. Leveraged against foreign exchange reserves, the central policy banks and sovereign wealth funds push credit through a variety of purpose‐built infrastructure investment funds to provincial governments, state‐owned enterprises and ultimately to offshore projects. This paper explores the historical institutional development of funds used to channel central government funds through China's financial bureaucracy into target countries. We explore the export of the policy bank model, provincial implementation and recipient regional industrial policy, and examine the role of international capacity cooperation in China's international trade and investment strategy and its implications for China's domestic industrial policy. We conclude with post‐Keynesian analyses of China's export of industrial overcapacity while maintaining a closed financial model which is likely to introduce excessive risk to the global capital pool.

Crossroads in the Past 23Years History of the Romanian Energy System

Determinant factors of the Romanian energy systems’ transformation processes include both positive and negative ones. The former refer to European integration, creation of the Single Energy Market, the important number of clients/consumers, the energy systems’ performances - the first economic structure integrated with the European ones -, the existing primary energy resources etc. The latter include the lack of a coherent domestic industrial policy and the vulnerability of decision makers facing external pressures. The Romanian electricity generation structure has modified during the last 23 years. The main coordinates comprise: a continuous reduction, nearly to extinction, of the main generation company's share of the electricity market; atomization of the generation sector; privatization of five from eight existing distribution companies; creation of the supply segment; and, last but not least, the electricity price liberalization. The paper analyses some of the contradictory tendencies in over 20 year late history of the Romanian energy system and draws a series of possible measures to implement in order to counteract the negative results.

If diversification is good, why don't countries diversify more? The political economy of diversification in resource-rich countries

For resource-rich countries, diversification is claimed to represent a strategy for reducing resource curse problems. This, however, depends on whether diversification has a positive effect on the country's institutions. While there is a lot of evidence that exports of oil have a negative impact on institutions, we know much less about the extent to which diversification leads to better institutions. This article applies recent political economy theory to the phenomenon of diversification. Theoretical arguments suggest that it is the pattern of industrial activity rather than diversification per se, which affects institutions like democracy. In other words, not all forms of diversification lead to better institutions. Furthermore, where diversification has a positive impact on institutions, diversification may be difficult to attain when it threatens the power base of the ruling elite. A possible implication of these arguments is that policies for diversification should focus on international regulation affecting elite incentives, rather than domestic industrial policy.

Trade, markup heterogeneity and misallocations

Markups vary widely across industries and countries, their heterogeneity has increased overtime and asymmetric exposure to international trade seems partly responsible for this phenomenon. In this paper, we study how the entire distribution of markups affects resource misallocation and welfare in a general equilibrium framework encompassing a large class of models with imperfect competition. We then identify conditions under which trade opening, by changing the distribution of markups, may reduce welfare. Our approach is novel both in its generality and in the emphasis on the second moment of the markup distribution. Two broad policy recommendations stand out from the analysis. First, whenever there is heterogeneity in markups, be it due to trade or other distortions, there is also an intersectoral misallocation, so that the equilibrium can be improved upon with an appropriate intervention. This suggests that trade liberalization and domestic industrial policy are complementary. Second, ensuring free entry is a crucial precondition to prevent adverse effects from asymmetric trade opening.