International economic law and the reinvention of industrial policy: Opportunities, limitations and risks

Abstract

BACKGROUND: Many studies are focused on traditional (old) or modern (new) industrial policy. There are insufficient studies linking the emergence of the knowledge economy and the institutional requirements to underpin inclusive social and economic development in developed or developing countries. OBJECTIVE: This study aims to analyze the characteristics of the knowledge economy and the institutional requirements for more inclusive and sustainable socio-economic developments. Constraints of the international economic law in its current form for more inclusive and sustainable industrial policy in developed and developing countries will be put forward. The inclusive knowledge economy requires not only innovative advanced firms but also innovative and creative public sector employees capable of supporting and disseminating opportunities of the knowledge economy to the entire society. Moreover, the inclusive knowledge economy requires lifelong learning processes of the workforce in developed and developing economies. Therefore, a human dimension, broad participation, and shaping of modern development strategies a key to developing an inclusive and sustainable knowledge economy. Institutional constraints of the international economic framework are currently not adequately supportive of such a structural shift. The objective of this study is to show the possible adjustments at the international and national levels to support the development of an inclusive knowledge economy. The human dimension (participation, creativity, imagination) of the public and private sector goes hand in hand with institutional innovations. METHODS: The normative and institutional analysis, embedded in the historical context of industrialization patterns in the selected countries, will provide insights into the institutional requirements for an inclusive knowledge economy. RESULTS: The result of the conceptual and normative as well as empirical comparative analysis will provide insights into the possibilities and needs for institutional innovations at the regional, national, and supranational levels of polity while embracing the need for a more supportive international normative context. Several possible institutional innovations at the national levels, such as regional public venture funds, decentralized support, and training centers, are provided. A reform of the Agreement on Subsidies and Countervailing Measures to better delineate between potentially productive and harmful subsidies at the international level can be seen as a reform proposal at the international level. CONCLUSIONS: Industrial policies in developed and developing countries will not be able to address the social and economic divides between advanced and stagnating sectors of the economy without addressing the requirements for institutional innovations at all levels of the international polity.