Showing category "Industrial Policy" (Show all posts)
Below is the executive summary of my Second Year Policy Analysis, entitled "Domestic Broadband Infrastructure Policy: Laying the Foundation for the Future of ICT in Tanzania." It examines the Tanzanian government's policy regarding national backbone infrastructure. Email me if you'd like to read the full paper.
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With the recent launch of its submarine fiber-optic
cable, SEACOM removed the most significant historical constraint to
East African broadband connectivity.
Nonetheless, lac... Continue reading ...
Dani Rodrik's teaching forms the basis for how I approach industrial policy - namely that governments should intervene where markets fail, and implement policies that target those failures. This principle also forms the basis for an issue I have with how he approaches policies to promote economic growth through innovation.
In short, Rodrik's position is that market failures lead to an inefficient allocation of resources, which is particularly acute in developing countries. He argues that en... Continue reading ...
This post is a follow up to yesterday's about an article in this week's Economist that discusses the work of one of my professors, Ricardo Hausmann. Though there are important caveats I think people need to understand (see my post), the work has tremendous value in helping us understand how the structure of economies evolve. The real problem comes when Hausmann partners with Dani Rodrik and Charles Sable to translate his findings into policy prescriptions. Somehow, something has gone terr...
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There's an article in this week's economist about Ricardo Hausmann's product space. I'm happy to see it getting mainstream attention. It's incredibly
important work, and it just makes intuitive sense. But before we start using it for policy decisions, we should be aware of some of the
major caveats. To summarize, what Hausmann and Hildago did was create a mapping of products across the global economy, defining proximity by looking at the probability of a country having a comparative advanta...
As I sit here during my winter break delving deep into broadband policy for my thesis, a few of the things I was reaching for but not quite understanding last summer in Liberia are now becoming clear. While the appropriateness of many of the policies are very much context specific, a few are really no brainers that would have an enormous impact if adopted widely across the African continent.
The premise for these policies is simple: they promote and take advantage of opportunities to foster c... Continue reading ...
Africa is currently at a crossroads with respect to
broadband policy. Multiple
submarine cables will come online around the continent over the next several
years, radically changing the economics of high-speed Internet delivery and
driving significant investments in domestic and regional telecommunications
infrastructure. Competition in
these markets is highly imperfect due to the high fixed costs necessary for
entry, and positive externalities create suboptimal allocations. These market... Continue reading ...
See my posting below What Dani Rodrik Taught Me About Industrial Policy for background on this one. In a nutshell, when resources aren’t allocated efficiently, structural shifts in the economy to higher productivity activities can create economic growth. Policy interventions to promote these shifts are justified only when we can identify a market and/or government failures that is inhibiting these shifts from happening on their own. What happens when we have identified a list of both marke...
See my posting below What Dani Rodrik Taught Me About Industrial Policy for a description on what allocative inefficiency is, where it comes from, and how industrial policy can improve resource allocation to create economic growth. I felt it was important to make a couple points regarding the implication for overall allocative efficiency of policies justified by efficiency gains in specific sectors. My last post explains how it might be easy to always justify government intervention for sect... Continue reading ...
Per my last post, the key takeaway from Dani’s industrial policy teachings is not to target sectors, but specific market or government failures. Only if these failures are present is government intervention justified. The big ones we should be looking out for are learning externalities and coordination failures. But…it seems one can always justify learning externalities, whether in the form of learning by doing or learning about costs. I didn’t get into these on the last posts, but le... Continue reading ...
I just took my final today for my Economic Development: Theory and Evidence course, taught by Dani Rodrik and Rohini Pande. So if there’s ever a day to post on what I’ve learned about industrial policy from Dani, today is definitely the day. The first fundamental welfare theorem of economics tells us that a competitive equilibrium is efficient, provided markets work perfectly. This is to say the marginal product of labor and capital are equalized across the economy, otherwise resources c... Continue reading ...
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