Industrial Policy and Economic Development in Emerging Economies in the Sector of Renewable Energy
In her PhD project, Franziska deals with the question of exploring new industrial sectors within an industrial policy agenda. Low-and-middle-income governments need to protect certain vulnerable sectors (infant industry argument) while they still want to be integrated into the global economic order. How does a successful balance between strategic trade policies and protective industrial policies look like? In order to answer this question, Franziska will look at four industrial policy measures in one specific sector: sectorial or sub-sectorial subsidies (1), protectionist measures through tariffs (2), public investment into technological development (3) and the impact of trade and investment policies in that sector (4). The chosen sector which shall exemplify the findings is the sector of renewable energies. Embedded within the broader research project (GEE), this PhD will also be explained by the theories of institutions: consistent industrial policies based on strong institutions lead to economic development. Leant on the common GEE research frame, the policy performance level (institutions) and the structural level (governance) will be taken into account. These dimensions will elaborate the relationship between state / government and private sector as well as the relationships within states (for example by looking at trade policies). As case studies Franziska has selected Georgia and Vietnam. Both states have selected the renewables sector as one of their strategic industrial development areas.
The New Consensus of State’s Activism in Agricultural Sector of Georgia
Tamar Jugheli is interested in studying the new consensus of the state’s activism in Georgia. The research aims to understand the governance forms of state activism and its efficiency in terms of transparency, reciprocity, credibility and achieving developmental goals. The researcher will use state business relations (SBR) as a proxy for state activism, and will study its governance structure and economic efficiency. The key research question this study addresses is how state business relationships are institutionalized and impact on economic performance in Georgia. The researcher will concentrate on SBRs in agricultural sector, as this sector is prioritized by the government, providing financial and technical support. For her analysis the researcher applies the theoretical framework of the New Institutional Economics. The research strategy applied is qualitative objectivism. The research will rely on the data collected via open interviews with representatives of the policy makers, private sector and beneficiaries of the implemented SBR projects. The research aims to contribute to the academic debate about the state activism, the role of institutions and the implementation of state-led, market enhancing economic policy. This research is a part of the multidisciplinary project governance in Emerging Economies (GEE). The project aims to study the cases of state activism, its structural and policy performance in post-Soviet region countries, Georgia and Kazakhstan. The project’s analytical framework relies on the tools and approaches of New Institutional Economics and the literature review relies on the existing research on state activism in the East Asian countries.
Towards Effective State-Business Nexus in the Industrial Policy of Kazakhstan
Diana Usmanova in her research focuses on the ability of the state to effectively cooperate with the private sector in order to promote economic development. Industrialization experience of countries in East Asia and Latin America is a telling example of how state and state’s interaction with corporate sector can create (un)favourable conditions for successful industrial campaigns. Based on this experience from other regions, research on Kazakhstan’s case aims to seek an answer to the question of how state-business cooperation in Kazakhstan has affected the results of its industrial programme. The research question, therefore, addresses many aspects of such interaction, such as state-business risk sharing system, performance-based incentive regime, control over re-investment structures, system of competition creation and sustaining.Using process-tracing methodology, the research will cover the period of the two five-year industrialization programmes (2010-2014 and 2015-2019) to discover whether institutional structure and policy formulation and implementation in the area of industrial policy in Kazakhstan carry characteristics that are conductive to successful target achievement. The expected outcome of the research would be a conclusion whether and how state in Kazakhstan provides effective leadership and its private sector is embedded in formulation and implementation of industrial policy. Finding an answer to the given research question will enable the author to attain the broader aim of Governance in Emerging Economies project, namely investigating how transition states’ economic development is influenced by state intervention and specific characteristics of institutional matrix.
Comparative Case Study of Machinery Industry related National Systems of Innovation in Uzbekistan, Kazakhstan, and Kyrgyzstan
by Misook Choi
The development of Machinery and Equipment industry often shapes economic trajectories of a country, particularly so when they ensure the stability of agro-industrial development, energy and mining sectors and other key sectors of the economy. Misook Choi in her PhD thesis investigates whether and how the industrial sector evolved in Central Asia through comparative case studies of the sector in Kazakhstan, Uzbekistan and Kyrgyzstan. The researcher selected the three states because during the Soviet era, the current Central Asian region, particularly the three countries in question were one of the main production centers of the Machinery and equipments for the whole Soviet Union. However, the evolution of the sector to date differs greatly after their independence. This study uses the concept of National Systems of Innovation (NSI) as the analytical unit and focuses on comparing the setting up, organization and evolution of the NSI related to Machinery and Equipment industry in the three states. The study on NSI will allow the researcher to look into which parts and mechanism of the system, such as interaction among actors, the role of institutions and policies, education and training, R&D, infrastructure, macroeconomic and regulatory context, factor market and product market condition and interaction with other networks and systems contributed to the variance of the achievement. The researcher uses interviews, questionnaire, and observation as primary source of data after illustrating a quantitative picture using indictors and indexes on the countries examined. In line with the GEE project, this research explores how and to what extent state activism tends to influence the creation of innovation and growth in Central Asian region.
Socio-political Embedding of State Activism
The most significant critique on state-led economic policy of the 1950s-1980s was not economic but political. Economic decision-making in developing countries could often not be shielded from political pressure or capture by particularistic interest groups. However, successful cases of state activism exhibit an institutional framework that not only guarantees significant autonomy of state bureaucrats but also creates incentive compatibility between powerful interest groups and the national development agenda. As any changes in economic regulation or state interventions cause distributive effects within the society, policy-makers are requested to set appropriate incentives to mobilize private business in line with the national development agenda and to avoid moral hazard. This cross-country study looks the institutional frameworks for (i) establishing incentive compatibility between private business and the state and (ii) performance-enhancing governance structures. The research will focus on state measures in the field of infant industries and capital control. The former allows for studying the state’s measures to mobilize and steer private sector activities; the latter is politically and economically relevant for the understanding the distribution and re-investment of economic rents. The study will deepen our understanding the socio-political embedding of successful state activism in various societies.