 I'm Lindsay Whitfield, but my colleague Lars Boers here. And this is a joint paper by both of us. Yesterday, Dirk Willem recounted about how industrial policy has returned to mainstream discussions and development economics. And for those of us who consider ourselves heterodox economics, this is a very good thing. And there's clearly a growing consensus about the importance of industrial policy, I think largely thanks, in part, to Daniel Roderick's own work. But I think there are still a lot of differences about what we mean when we say industrial policy. And that partly came up this morning with John Sutton's presentation. So I just want to start with saying, what is it that we mean when we say industrial policy throughout the presentation? And also why the politics is important. And I hope to convince your economists in the room about the importance of politics, the centrality of politics. And I'm going to go into some terrain that is very political science-y. So I hope that I can try to go slowly and take you with me. But for us, we use a term industrial policy very much, I think, as John Sutton said, industry policy. We don't mean these large national strategy plans. We very much mean targeted efforts to support specific economic activities in order to increase productivity, to move into new sectors, to diversify the economy, to upgrade the technological capabilities of domestic firms. So branching into new sectors into new export markets and increasing productivity and upgrading in existing productive sectors and industries. And these are often very sector-specific and can be on a very low level type of industrial policies. So they're not writ large. They're industry-specific, sector-specific. And we also argue that economic transformation is driven by successfully implementing industrial policy. And that in some way, although I'm not going to be very Africa-specific today, we can come back to this in the discussion. But in the paper, we argue that the lack of economic transformation in African countries can very much be understood in terms of the lack to successfully implement industrial policies in the past as well as in the present. And part of that reason is around the politics of industrial policy. And we argue that industrial policy is inherently political because the types of specific industrial policies targeting specific economic activities to increase productivity, to upgrade, to move into new sectors that you don't have any experience in in the country or to access new export markets, inherently involve issues of resource allocation, institutional changes, and the enforcement of new rules and institutions governing land, labor, and capital, as well as learning rents. For those of you not familiar with that term, it means it's this Alice Amson's kind of reciprocity where you give out rents to firms in exchange and other forms of government support in exchange for investing in learning and investing in the ability to learn how to compete. We'll come back to that. But these almost always involve changing the existing distribution of economic benefits in a country. We're not going to go into why we have a whole chapter in our book about that, but just take it as our starting assumption that it does. And therefore, industrial policies, even the smallest little one, can be very socially contested. There will be groups who mobilize against it and who resist it. And therefore, for us, industrial policy is very much about governments not only have to create the institutions required for implementation, they have to be willing and able to enforce implementation of socially contested decisions. And so what we mean by the politics of industrial policy is what are the conditions under which this can happen? What are the conditions under which industrial policies can be successfully implemented, given that these things are going on? And what are the politics that make those conditions possible? And that's what I'm basically going to talk about today. There is a full paper, and I can't give you the whole paper, which is complicated, so I'm only going to highlight some key points in it. But to provide a kind of background and also to engage with the discussion just a bit by Kunal Sen, I wanted to talk about when we have these questions, what are the conditions under which industrial policy can be successfully implemented? And what are the politics that's made it possible? There has actually been a very large debate in the political science literature, political economy, and in area studies literature, particularly, of course, around trying to explain the most successful cases in East Asia. And I would argue, my colleagues would argue that, really, you can categorize that into three approaches. And this is somewhat different than Derek Willems' categorization in Kunal Sen, but I would say that there have been three approaches. The developmental state approach, which basically, if you have to boil it down, argue that technocratic elites were insulated from distributional pressures within society, as well as political interference, and thus they were able to devise and implement long-term industrial policy. But this was critiqued on many grounds, one being it didn't really explain what made the state act the way it did. Why did these technocrats have a long-term vision? But it was also critiqued in that it didn't give a prominent role to business. And so a new approach came up, business-state relations, and sort of there are different strands of it, but the institutionalist one is the most well-known. And it's actually the one that Kunal Sen was using yesterday that said, actually, business played a very important role in driving state actions and policy design. And this literature focused on what kind of factors determined whether collaborative or collusive business-state relations emerged. And it very much emphasized formal institutionalized relations and had a big emphasis on business associations at the national and at the sector level. But then there's a third approach, which critiqued both of these and said, actually, if we go back to the empirical material, they made a different argument. And they said that government policy choices, as well as its ability to implement them, and how it interacted with business, what drove it to act a certain way, were definitely shaped by the incentives arising from the imperatives of ruling elites to remain in power and thus build and maintain political support. And we call this the political survival of ruling elites approach, and it's very much dependent on the understanding of what constitutes governments, how do they stay in power. And that's about understanding ruling coalitions and how you build and maintain them. And the point was that the state is never completely insulated, ruling elites are never completely autonomous. And what's important is to understand how coalitional pressures shape the political costs of certain policies and the ability to implement them, given the resistance or support from specific factions or individuals within the ruling coalition, including those financing the ruling coalition. And it also challenged the business state relations and literature and the fact that it said that ruling elites always channel state resources to key constituencies forming their coalitional base in order to maintain political stability. And this even happened in South Korea under PARC, that sort of quintessential developmental state. And that rent seeking is always there. The question is why some forms of rent seeking supported productivity improvements and learning while others did not. And it argued that whether these relations are collaborative or collusive could actually only be read after the fact, because that depended on whether the rents that were accessed were put to use in increasing productivity and learning or not. So there is this blurred line that I was talking about yesterday about collaborative and collusive. So that's a sort of background of the story. What my colleagues and I have done in our project, which we call the politics of production, where we look at African experiences in comparative perspective, is that we wanted to create a framework for understanding the conditions, exactly the question I posed at the beginning, the conditions under which industrial policies were successfully implemented and the politics that made it possible. And there was no existing, we felt framework. What we did is we took a lot of the very scattered literature here often in case, country case studies are comparative and synthesized it into a model. We also incorporated insights from our African country studies because a lot of this literature was based on non-African studies and we wanted to see if it related, if it helped us to understand what we were seeing and we had four country studies, Mozambique, Ghana, Uganda and Tanzania. In each country we looked at two productive sectors and at the industrial policies that were attempted in those sectors. And those findings have been, in a way, integrated into the model. There's not enough time to present the sort of key aspects of this way of thinking and the case studies. So if you wanna ask about specific case studies in discussion time, I'll be glad to. And I can only really highlight the key point. So there's going to be a lot of unanswered questions and confusion. But hopefully I'll get across the key differences in this way of thinking because it embodies arguments that are very different from a lot of mainstream positions. And you'll see that as I go through. So the model explains the conditions under which industrial policies successfully implemented. And it requires three sets of conditions to exist at the same time or occurring at the same time. And this is, I mean this shows you already that industrial policy is not an easy thing. We sometimes advise governments to do things as if they were very easy, but they're not. And I'll walk through each of these one at a time. So we'll start with mutual interest. For ruling elites, so we have three sets of actors, but really we're gonna talk about a faction of ruling elites because nothing is ever done by all of them, it's usually a group within them. For a faction of ruling elites to want to address the productivity constraining problems in a particular sector, they must have an incentive to do so. They must have some kind of mutual interest with a relevant group of capitalist firms or farms. So let's look at what might create that kind of mutual interest. And on the capitalist side, it's not a good business environment that matters. We've drawn a body of literature which actually argues against that a little bit as Danny Rodger has also done, but rather what capitalists want is the certainty of their ability to profit in the future from their investment decisions. They want security of profit. And this can actually occur in very, very bad general business environments. And we have several cases of that that we can show. And in order for them to feel secure about their ability to profit if they make these investments, they need certain state actions, particularly in least developed countries, such as providing infrastructure, access to cheap capital and land, subsidized cost of training labor and research, and other kinds of costly investments required to enter new, especially to enter new economic activities, as well as, for example, negotiating trade agreements. So capitalists actually need the state to do a lot of things. And this is also the case with foreign investors. They also need the state to do a lot of things in order to ensure that they can be profitable in that business. It's particularly true in African countries and particularly true in new sectors because if it was already profitable to do it, people would be doing it. And we don't specify a type of ownership here. We can come back to that later because in history we can see that this can be a lot of different types of firms, domestic, private, foreign, state, joint venture, party-owned, and all kinds of combinations of those. Rather, we focus on what the processes that need to be done. But we do engage in the paper a little bit in a debate about, while foreign investors can be very important in bringing technological capabilities and access to export markets into a country, at some point the state also has to help domestic firms grow in terms of their technological capabilities. Ruling elites, on the other hand, are interested in winning elections, maintaining supporters within their ruling coalition, financing the ruling coalition, and securing government revenues and foreign exchange to fund other state policies, usually distributional ones. So what you need is between those to find some kind of mutual ground, and it can take different forms. Sometimes it's the firms directly financing the ruling elites, but other times it's a combination of factors, so you can't really specify. Just the point is that you have to find mutual interest. So mutual interest are very important in getting ruling elites to want to support a set of industrial policies, but it's not sufficient. You also need to have pockets of efficiency in learning for productivity. Because the group of ruling elites that's pushing a certain set of industrial policies needs to be able to exert enough control over the individual and factional demands within the ruling coalition. Okay, so come back to this in a minute, but every country, the government, is composed of a ruling coalition with all kinds of different factions, and there's a different distribution of power within that. But in order to implement a set of policies, particularly if they're going to have resistance coming from within the ruling coalition or outside of it, that group that's pushing the industrial policy needs to be able, and this can be done in different ways, to exert enough control to keep those demands from within the coalition from undermining the economic objectives or from successfully resisting a change in the distribution of economic benefits. This creates what we call the pocket, a pocket in which state bureaucrats can work in relative autonomy from the particularistic demands from within the ruling coalition, and to have enough political support to resist any or to counter any resistance from other groups in society. So that's the pocket part, and the important thing is that this can occur in a bureaucracy, a state bureaucracy that can be generally inefficient, corrupt, that's not a Weberian bureaucracy, and it also gives us a different way of understanding how to state capacity emerge, okay? You don't need a great Weberian bureaucracy. What you need is the conditions under which a pocket of efficiency can emerge, and then it can explain why you have very good single state agencies in certain countries that work really well, like Senegal and Angola, like the Cocobot in Ghana, like the Sugar Institute in Mozambique. The efficiency side relates to here. Ruling elites need to trust the state bureaucrats, this is important, but the state bureaucrats also need to have a technical knowledge of the industry, and that creates the efficiency part. And then the last part, we talk about learning for productivity, and this is important because for us industrial policies basically are about meeting the specific needs of industries in a specific country, and even specific firms in that industry, as well as compelling firms to increase their productivity, i.e. becoming competitive, through investments in learning, and often investments in learning in exchange for state support, and that makes learning rents in their enforcement a key aspect of industrial policy, and that's here where we have learning for productivity. In order for this to happen, you need two things. State bureaucrats not only need to have technical knowledge of the industry, but they also need to have practical knowledge of the actually existing firms and industry, and this involves something called embeddedness which Peter Evans has talked about a lot, but it also requires a mediating role that state bureaucrats need to be able to mediate between the political objectives of the ruling elites and the economic objectives of the capitalist, and this often requires that the capitalist side is quite organized and relatively few, and then last thing which brings us full circle, and it's probably the most important part in some sense, is that state bureaucrats need to be able to enforce the new rules in new institutions, especially on learning rents, and that can be undermined if the capitalists have too close relations to the ruling elites and therefore can resist enforcement, or if ruling elites aren't able to actually control factional demands otherwise within the ruling coalition, which may also have interest against enforcement. So you can see it's actually an interactive process, all the legs are linked together. Now this model depicts an ideal situation, in reality the alliances vary and so outcomes vary, so this is just a sort of stylistic model. The last step of it, which I will talk about in my last two minutes, is the political settlement. So this is the conditions under which the conditions require to implement policy, but what is the politics of it? And that gets us into what we call the political settlement. The political settlement refers to the distribution of power in a specific country and the sets of institutions that shape the distribution of economic benefits in that country at a given time. And a country specific political settlement determines basically who the actors are in this model and the incentives that they face. And in the paper we go through this in much more detail. Now it's hard to give generalizations, oh I went from two to zero? Okay. It's hard to give generalizations about how that plays out, but these are some key points we just want to make. And here we look at the ruling coalition structure and the sizing capabilities of domestic capitalists and now just summarize that coalitions which have a greater concentration of power and authority both among ruling elites within the ruling coalition between top elites and lower levels and less powerful factions outside of their ruling coalitions are more able to act and enforce policies. The important point here is that this is a rare situation. Most ruling coalitions in history and now are characterized this way. This helps us to explain why developmental states were rare. What you normally see is a dispersion of power which means that ruling elites often focus on immediate political survival and there's so much resistance of different powerful groups both within the coalition and outside it that it makes it very difficult to do these things. And there are less straightforward generalizations on this point but you can see them in the paper. I just want to end by saying many African countries unfortunately have the position of falling under great dispersion of power and weak domestic capitalists. And so what we argue is that the conditions are not very good for sort of more ambitious industrial policy but that doesn't mean it's not possible. And what we see is that these contestations in the political settlement play out in different ways by the different sectors and therefore we need a sector approach also to understanding the politics of industrial policy. And that we can see in our cases in the same country industrial policy succeeded in one sector and yet failed in the same sector under the same government, the same ruling coalition and the same kinds of industrial policies. Thanks. Okay, thank you very much indeed.