 3. 인도시아 폴리시 인도시아 폴리시의 경험이 가장 핵심하고, 가장 흥미로운 경험이 있다면, 80년대, 90년대의 경험이 있다면 많은 freemark의 경험자들이 인도시아 폴리시의 경험을 한국과 일본과 국가무회의가 전혀 없었죠. 이와 함께 하여서는 유리한 인도스워치에 대한 유리한 문화가 있었습니다. 벨라, 블라스상, 그는 한국 정부는 인도스워치에 대한 인형을 강조하지는 않았습니다. 한 102세트의 연구성에 대한 연구성과 성장의 연구성에 대한 연구성과 동일한 기술을 제공하고 있었습니다. suficiente to qualify fly with you flitted through the financial press and I remember reading this financial times article in the late eighties saying that South Korea is arguably the most planned economy outside of the Soviet bloc despite the serious journals 아티클을 제작하는 것에 대해 제작할 수 있을 것입니다 이것이 아이디어로지컬리에 더 컴퓨팅한 것입니다 한국의 사이언티스타들이 갑자기 말하는 것에 의해 영웅이 많이 흐르는 것입니다 그리고 영웅이의 사이언티스타들이 정말 진짜로 말하는 것에 대해 말하는 것입니다 저신린의 정리를 교수의 정리를 압수수색하고 전체공원의 정리를 압수수색하고 오올빵의 지방뿐인 주자의 정리를 압수수색하고 이 정리를 압수수색하고 극장의 기술을 사용하고 사회적 음식의 보석을 유지하는 것입니다. 사회적 음식의 보석이 더 위협되기 때문에 우선 경선을 통해 운영식을 통해 국가ong의 장보를 통해 국가ong의 장보를 통해 국가ong의 장보를 통해 국가ong의 장보를 통해 그래서 우리 사업을 시작했고, 다양한 일부러 밖의 일부러에 강조한 기술을 줄일 것입니다. 그래서 그 이유는 우리가 국가의 기향을 끌어주는 불가능한 국가의 안전의 고급 모델을 만들었다며, 거기에 공개不起 수는 없지만 국가의 기능을 끌어주는 다on의 기술을 끌어주는 사망자의 기능을 끌어주는 국가의 기능을 끌어주는 경험을 끌어주는 경험을 끌어주는 경험을 끌어주는 경험을 끌어주는 이제는 다른 나라에 대한 위험을 겪고 있는 것입니다. 그래서 인력적인, 그린 기술, 바이오 기술, 그런 것들이 있습니다. 중국은 중국에 대한 정의에 대해 좀 더 잘 어울리는 것입니다. 중국은 전혀 부족한 경험이 아니었습니다. 포켓타 인간도 10,000만 원이 아니었습니다. 포켓타임컴은 10,000만 원이예요 많은 뒤편지대가 있습니다 전체적인 기술이 꽤 높습니다 그러나 나노특공지, 솔라, 타널 등이 아주 빠르게 올라오고 있습니다 나노특공지, 솔라, 타널 등이 더 강렬하고 있습니다 나노특공지, 솔라, 타널 등이 더 강렬하고 있습니다 나노특공지, 솔라, 타널 등이 더 강렬하고 있습니다 나노특공지, 솔라, 타널 등이 더 강렬하고 있습니다 나노특공지, 솔라, 타널 등이 더 강렬하고 있습니다 운석은 사업자들과는 연구장에서 사업자들과의 개발적 사업자들에 대해 정의하고 있습니다. 하지만 다른 사업자들은 사업자들의 수목이기 때문에 더욱 비교적 사업자들에 대해 제안시킬 수 있겠죠. 전문기, 기업, 등의 사업자들에 대해 또 다른 사업자들과는 기업의 사업자들에 대해 말할 수 없을 것입니다. 임신과 기술이나 기믹, 기술, 기술의 정치에도 불에 필요한 점이 필요합니다. 그래서 기술의 정치에 비해 시장의 정치에 비해 시장을 불렀습니다. 또한 다른 정치의 정치의 정치의 문제는 슬렉티비티의 방법입니다. 시장이 유지된 해석에 도움이 되었습니다. 시장의 정치, 이쑤, 정치, 기술, 시장의 정치에 계십니다. 다른 기술도 그의 권력과 대응을 동의하고 전략적인 관계, 같은 관계에 관한 것과同히 전략적인 경험을 제공하고 인사, 대가리, 공간, 공간, 유지한 경험을 통제하고 싶습니다. 단순히 전략적인 관계를 제공하고 전략적인 관계를 제공하고 제가 생각하는 이 다이코토미 between general and selective industrial policies is a false one because in a world with limited resources whatever policy you choose you are favoring some sectors over others education, okay maybe up to say lower secondary level is pretty general so it benefits all sectors equally but beyond that education is actually quite specific you know in countries like Germany and Japan they have very developed vocational education system so from the age of 14 or 15 I mean people begin to really learn and hone their skills in particular industries at the university level that we are all specializing if the government gives more funding to particular types of engineering departments then it's actually favoring sectors that will use those types of engineers infrastructure I mean infrastructure is not something kind of amorphous and can be remoulded you either build a railway between your I don't know copper mine and the seaport or you build an airport for say the flower growing region so once you have decided to build infrastructure you are committing yourself to promoting or not promoting particular sectors because infrastructures have particular locations and they have different cost implications for different industries I mean airports will be no good for copper mining at the region because you can export copper with airplanes whereas if you are growing flower if you are growing fresh fruit that could be crucial industrial policies always selective the question is what do you choose it's simply not true that you can have this general policy that will even handedly affect everyone in the 18th and early 19th century Britain was the most protected economy in the world between the 19th century and the second world the US was the most protected economy in the world lot of countries had regulations on foreign direct investment and so on and so on so it is not as if industrial policy ended in these countries with their economic maturity industrial policy continued yes protectionism came down after the second world war before the second world war tariff levels were really high in many countries 50% in Britain and even relatively low figures can hide a lot of selective protection so for example Belgium might have had 9, 10% average industrial tariff rate in the late 19th century but some sectors like iron were getting 60% protection textile was getting 80% and so on so anyway protection was very high until the second world war but then it started coming down note that basically it was only in the 70s that the levels of industrial tariff in today's rich countries reached the level that developing countries have today since the World Trade Organization was established in 1995 there has been quite serious trade liberalization in developing countries and today their average industrial tariff is about 10% but that's the level that today's rich countries reached only in the 1970s by which time they were actually a lot wealthier than your average developing country today more about the decline in tariff protection was also accompanied by increasing the range of industrial policy measures that is used and especially between the 1950s and the 1980s many rich countries like France, Japan, Austria, Norway, Italy, Finland used strong industrial policy so all these countries first of all heavily regulated foreign direct investment in order to promote domestic firms especially Japan and Finland virtually banned foreign direct investment until the 1980s all of the other mentioned countries except for Japan used state-owned enterprises in strategic sectors so until the 1980s for example France and Austria had two of the largest state-owned enterprise sectors in the non-socialist, non-oil-producing world at the time their state-owned enterprises were producing 13, 14, 15% of GDP France and Japan used the planning they had five-year plans I mean these were indicative planning so it was not mandatory planning like in the Soviet Union but this was a serious attempt to first of all provide the vision for the future shape of the economy by announcing priority sectors the kind of financial and other supports that the government is going to give to them how these priority sectors are going to relate to each other and with other sectors and yeah, I mean it was planning in a very serious sense Germany and actually parts of Italy had many regional governments that used industrial policy to promote small and medium-sized enterprises in the region so they used banks that they own I mean many of these regional governments had public banks to provide affordable long-term finances to small and medium-sized enterprises in the region they worked with local industrial associations to promote cooperative arrangements to supply inputs that are too expensive to be provided by individual firms like research and development, export marketing and worker training when you have relatively small firms I mean things like especially R&D and export marketing which have a lot of fixed costs a lot of upfront costs are very difficult to provide the United States may pretend that at least after the Second World War it has had little industrial policy but actually it has had one of the strongest industrial policies in the world only that it is not called industrial policy it's called R&D policy so almost all the sectors in which the US today has international technological leadership were initially developed by the US government usually US military so computers initially developed by Pentagon Internet later was developed by Pentagon semiconductor was initially almost entirely financed by US Navy my colleague Mariana Matsukato has become famous for writing this article showing how just about every single piece of technology the microchips, GPS system, touchscreen and so on contained in modern mobile phones were initially developed by US military research especially during the Cold War between the 1950s and the 80s the US federal government financed between 50% and 70% of total national R&D depending on the year and the corresponding figure in state led economies of Japan and Korea were only about 20% so who is actually state led the US government has an enormous influence on the evolution of these industries through these research funding programs I mean even today that the ratios come down but even today it's at around 40% the ratios are still 20-25% in Japan and Korea other countries were slightly different because they all had different conditions so for example, Thailand and Singapore had huge state-owned enterprise sectors I mean Korea's state-owned enterprise sector wasn't small I mean it was about 10% of GDP which is about international average but in the case of Singapore and Taiwan these were much bigger Singapore still produces 22% of GDP through state-owned enterprises the corresponding figure for Taiwan is 16% but it was higher in the earlier period when the private sector was less developed like Japan, Korea and Taiwan were overall very hostile to foreign direct investment although in some sectors labor-intensive export-oriented manufacturing like garment, shoes mainly trainers stuff toys and things like that they were open to foreign investment but in general they regulated foreign investment very heavily Singapore and China are a bit different because they used foreign direct investment a lot more so in the case of Singapore they very carefully identified sectors through industrial policy planning that they want to attract foreign firms to and they go out and seek partners and they talk to them and ask them what do you want if we want you to come and run your business in our country recently Singapore built the second airport in our country with very little land in order to host aircraft maintenance industry I mean this is not a random act because in Singapore 90% of the land was owned by the government once they built that aircraft maintenance companies came and then Rolls Royce relocated this aircraft engine research division to Singapore it's a very different form of FDI attraction than what we normally think is needed China has had fewer legal restrictions on what foreign companies can do compared to Japan, Korea or Taiwan but it very cleverly used its strategic position to do this informal bargaining but what it does is being A, one of the biggest markets in the world and B, a country with at least considering its level of general technology very well trained workers and good infrastructure it uses that attractiveness to this informal bargaining with foreign companies so give us more technology train our workers hire more local managers so small locally it's not written in the law but the attraction of the Chinese economy as a site of production and market is so large that a lot of companies have said yes we'll do that because we want to work with you well finally as for the industrial policy in non-East Asian developing countries the period between the 1960s and the early 80s when developing countries used a lot of industrial policy this is frequently condemned by mainstream economies as a period of misguided industrial policy called ISI or import substitution industrialization what you have to realize is that economies in Latin America and Sub-Saharan Africa have done much worse since they adopted neo-liberal policies and abandoned industrial policy in the 80s most countries in these regions have experienced what is called premature de-industrialization which means that your manufacturing industry goes into decline even before you fully industrialize also it is important to note that there have been cases of successful industrial policy at least in relation to some sectors Brazil developed civilian aircraft industry initially as a state-owned enterprise and privatized since the 1990s and this is now the third largest aircraft manufacturer in the world a lot of regional airlines in the United States fly the planes made by Embraer Malaysia has had significant success in electronics industry in the palm oil processing industry common sector in Ethiopia in the recent period has been a bit of a success although it is slightly too early to tell very surprisingly Uzbekistan has had quite a bit of success with the automobile sector by emulating Korean-style industrial policies so these are relatively minority of examples but it is not true that everything that other countries did was a failure I mean it's not because lack of theoretical reasons why industrial policy hasn't worked in many countries so I'm going to just group them broadly into three categories the first set of arguments I call the interdependence argument the first one is based on this idea of demand complementarities basically firms different industries they buy from and sell to each other how you develop different sectors is going to be different according to this pattern of mutual supply and demand so one type of this argument was called the big push argument when you are trying to develop an industry in a backward economy you basically have to develop the related industries together otherwise they will not succeed so for example if you are trying to build an automobile factory in a country full of rice farmers maybe you can make the car but who are going to sell it to they are all these poor people and we are going to get the inputs for the car you need steel, you need glass basically the idea is that yes, therefore you develop all these different complementary industries together and then they can buy and sell to each other workers working in steel factory unlike rice farmers will have money to buy a car the steel factory can sell to the car company the car company can sell trucks to the steel company and so on so Albert Hirschman thinking along a similar line however had a different view he said it's not as if all sectors are equally impactful on other sectors there are some industries like automobile which buys from a lot of other industries and he hold this relationship between different sectors linkages so you build the automobile factory and then it generates a demand for steel, glass, rubber it then also supplies to other sectors like retail, logistics and the indicative planning exercises of France, Japan and Korea are the best examples of industrial policy based on this logic because they were planning the economy on the basis of what if we want to develop this sector do we need to develop other sectors together develop the steel industry first before you develop machine tools industries and then of course there is the familiar externality arguments the classic example is the government promotion of activities that generate the positive externalities like R&D and training whether through subsidies or regulations R&D policy of the United States is the best example of the industrial policy based on the externality arguments more recently economists like Lin and Roderick have developed this idea of information externality which means that when form enters a new industry in a country with no prior experience in that industry that form actually generates information about that industry that can be used by other forms before they decide to move in or not to move in it's an interesting idea but actually in a way not very original because Malaysia have used policies based on this idea since the 1950s they had this scheme of pioneer firms so if you are entering a new industry you are given extra subsidies thirdly you have arguments based on the need for the coordination of competing investments this is an idea that is not really recognized in the mainstream literature but was very important in industrial policy especially Japan and Korea the idea is that if competing firms simultaneously invest without knowing the other firms' plans they could easily be over investment now in textbook economics this isn't a problem because if something doesn't sell you immediately switch to something else but in reality machines are dedicated workers are at least partly dedicated so you cannot say invest in I don't know making automobile and then realize the demand is not enough it basically means scrapping the machines and firing workers that you originally hired to make a automobile so industrial policy makers in Japan and Korea were very concerned with this which they called excessive competition so they did two things to deal with this one ax anti-planning so they had this licensing system and said if you want to invest in automobile or some of the more important sectors you need to get government permission and the government will look at the investment proposals and say no actually there's going to be too much you should invest this time around maybe five years later when we do this exercise again we'll let you have a priority and then we move on to the capability arguments the first of this is of course the infant industry argument the argument that governments of relatively backward nations need to protect and nurture young industries of their own before they can grow up and can compete with leading firms in the world market this logic of course has been used by virtually all countries throughout the history of capitalism another class of capabilities argument is arguments for regulation of direct input of technology either through technology licensing basically getting a license from a more advanced company to sell you the technology or through foreign direct investment and basically many governments have regulated this process to ensure that once these technologies come you also develop the capabilities to use them productively and at least make incremental improvement unless you do something about the technological capabilities to use these technologies properly what happens is that you import technology basically on a so-called ton key basis so everything comes ready you just turn the key and it runs unfortunately things go wrong unfortunately things get outdated and you don't know what to do except for calling the original company and they charge a lot of money to solve your problem some countries like Japan Korea, Taiwan they directly regulated technology licensing so they would say things like you cannot pay more than 3% of your revenue as the licensing fee or they might say this technology actually looks outdated you cannot import it and so on and finally the policies that I said were frequently used by local governments in Germany and Italy and the national government in Taiwan to help them accumulate capabilities because without R&D without technical consultancy provided by a government agency at a subsidized price how are these small and medium-sized enterprises going to raise their productivity and then we have a set of arguments which are classified on the risk and uncertainty in many countries governments set up financial institutions to provide long-term financing for investment typically these are known as development banks KFW in Germany KDB in Korea JDB in Japan BNDES in Brazil but these development banks will give you very often subsidized loans for 3 years, 5 years sometimes even 10 years the government can also set up state-owned enterprises if no one was willing to do it the South Korean government had this idea to build a steel mill back in 1965 and it tried to get financing from foreign donors and the World Bank which was at the time advising these donors said that this is insane Korea it's got income less than 5% that of United States it's got very little capital a lot of labor it should concentrate on labor intensive industries and it wants to build a steel mill the country doesn't even produce enough raw material please don't give money to them you go against the received economic theory you don't even produce raw materials you want to set it up as a state-owned enterprise and appoint ex-army general as the CEO what more do you need to fail well they managed to build this enterprise with money from colonial reparations from the Japanese and by 1973 it went into production by the mid 1980s it became one of the most efficient steel makers in the world it was privatized in 2001 but mainly for ideological reasons I mean it was making a lot of money still and it is still like the fourth largest steel maker in the world seen from today's point of view it is obvious that Korea should have set this up but at that time everyone said wow this is too risky future is too uncertain so the government stepped in with this old money secondly the government can help firms and industries restructure themselves in the face of big changes beyond their control financial crisis dramatic technological changes rise of China what have you in the 1970s Volkswagen the German auto manufacturer got into trouble so it was nationalized well regionalized if you like it was basically taken over by the local government of the state of lower Saxony Nieder's accent in German and actually the government of Nieder's accent still owns about 20% of Volkswagen because of that history the US the country of so-called free enterprise basically nationalized general motors after it went bankrupt in 2008 and have restructured it to compete in the electric car market and finally you have the policies that are intended to help workers cope with risk involved in the restructuring process through things like unemployment insurance job search service and subsidized retraining the Scandinavian countries Sweden and Finland especially have been very good with this so the workers there are not very resistant to the introduction of new technologies and redefinition of jobs and so on because they yeah I mean no one likes to lose their current job but it's not the end of the world you know they lose their job they'll get the unemployment benefit which is 65 and 75% they'll get up to two years of that provided that they go into retraining programs and then you will have sort of personal consultant given to you by the government to plan your retraining and find your job in new sectors so actually that you know Sweden is one of the most robotized economies in the world because Swedish workers do not fear robots anyway so that if you use these kind of things well it can actually facilitate industrial restructuring and development and even though they are not industrial policy proper they can be quite important yeah then let's talk about implementation issues you know the fact that there are theoretical justifications for a policy doesn't mean that you will necessarily succeed with that policy in practice because that the policy has to be well designed and well implemented so let's first of all look at the policy design well I think the most important thing is that policies need to be realistic in order to be successfully implemented but that doesn't mean that industrial policy makers should only try safe things you know this is the view of the World Bank you know in this famous report on East Asian miracle in 1993 the World Bank recommended that yes I mean some of the industrial policies used by countries like Japan and Korea even though they are highly unorthodox from our theoretical point of view kind of work but they work only because these countries had exceptionally capable bureaucracies do not try this at home so it might have worked for some people it is not going to work for you you shouldn't even try Justin Lin basically recommends that you should try to imitate countries that are slightly above you so look at countries that have per capita income twice maybe three times higher than yours and try to emulate their industries well that will be safer but that will mean that Korea would have never developed steel industry in the 1960s Japan would have never developed auto industry in the 1950s now when you try difficult things they will be failure but you know as the economist Joseph Stigl is like to say if you are not failing you are not trying hard enough so you need a portfolio of industry so yes quite a few safe bet and a larger number of medium difficult things and a small number of very difficult things but then unless you push yourself in that kind of way you will never progress beyond your current level also industrial policy constantly needs to be updated and adapted to changing conditions you know conditions change all the time you know the world economy changes new competitors emerge new technologies emerge and also you might have had some projection about the future development about the say industries and firms receiving your support for development but then they may have been mistaken maybe they are growing much more quickly than you had thought was possible and then you should curtail protection push them more aggressively into the export market maybe they are not doing as well as you thought they would and then you need to look at it closely is it because there were some unforeseen circumstances that were beyond their control or was it because these firms were getting lazy and living a comfortable life behind the walls of protection so you have to constantly watch how things are evolving and adapt and then there's the question of political economy first of all successful industrial policy needs to have the right political base it is well known that powerful landlord class as you see in Latin America tends to be against industrialization it's not just the landlords that some countries in the recent period have suffered from the excessive power of the financial class Brazil and South Africa are the basic example since mid 1990s for various historical and political reasons these two countries basically adopted this policy favoring the financial sector over the manufacturing sector and they have consistently had real interest rates running into 10, 12% which makes investment impossible the average profit rate of non-financial corporations across the world is between 3% and 7% if you have to borrow at 10% real you cannot borrow because you're not going to make enough money to repay it and still have some money left in the late 1980s depending on exactly which statistics you look at the manufacturing sector produced somewhere between 30% and 35% of Brazilian GDP today is not even 10% and falling because when you go and talk to capitalists in Brazil they said how can we invest and export? we have to pay 10, 12% real rate to borrow money our currency is overvalued at least by 50% our exports are not competitive but that does not mean that our country's political economy is completely determined by its history because you can always build new political coalitions let's talk about the United States the northern manufacturing states and the southern agrarian states were all the time at daggers with each other about protectionism so sometimes the northern states managed to impose higher rate of protection when the southern politicians become stronger they pull down the protection finally came to a head when Abraham Lincoln the first republican president actually the republican party set up just before Lincoln's election made a bold move to offer free distribution of public land to settlers in the west so the western states had always vacillated between the north and the south finally they were fully allied with the northern states and Lincoln could win this and the war settled but the thing in favor of the north and since then the US became even more protectionist started investing a lot in infrastructure, education, R&D that was the critical turning point in the US history in Germany when Bismarck initially ruled Prussia Prussian politics was dominated by these landlords called Junkers when he unified Germany he of course I had to listen to these Junkers but he also realized that he needs to provide protection to these newly emerging heavy and chemical industries the Junkers were not going to accept protection for these industries so he came up with this idea what later became known as the marriage of iron and rye the Junkers were mainly producing rye he wanted to protect industries like iron so he said okay we are going to protect both of you the Junkers get protection from new agriculture imports from the US, Argentina, Russia which were just beginning to flow in with the development of steamships and railways both in return we will also protect heavy industries that at least for a while worked very well and Germany to cover the UK as the supreme industrial power in Latin American countries this period of quite impressive industrialization between the 1930s and 50s were made possible because some of these politicians like Jethulio Vargas in Brazil Juan Perón in Argentina and Cardenas in Mexico they built this new political coalition of urban capitalists and workers against the landlords and for a while they provided protection to domestic manufacturing industries and actually they achieved quite impressive levels of industrialization in say for example 1960 South Korea's power capital manufacturing value added was something like $20 that in Mexico was $140 that in Argentina was over $200 the East Asian countries Japan Korea Taiwan they had land reform that got rid of the land load classes soon after the Second World War and then they had these regimes dedicated to industrialism which basically repressed the financial sector while it lost it basically the whole economic policy was geared towards the industrial sector rather than agriculture or financing Well, second political economy issue is known as the issue of embedded autonomy this term was invented by the American sociologist Peter Evans who compared the industrial policies in Brazil, Korea and India and came up with this conclusion that you need a state that is embedded in society has to have network and commitment to the society it cannot be made up of this elite who are not really interested in developing the domestic economy and society but this state also needs to have autonomy it has to be able to override sectional interests of certain groups of capitalist so that they can restructure the economy push it into new sectors raise productivity successful industrial policy requires pragmatism it is the countries that have shown flexibilities in the tools they use that were more successful in achieving their ultimate goals most extreme example is Singapore 90% of land in Singapore is owned by the government 22% of GDP produced by state-owned enterprises including the famous Singapore Airlines 85% of housing is supplied by the government-owned housing corporation called the housing board so it's an extreme example of a mixture of socialism and capitalism on the one hand you have free trade on the other hand you have 90% public ownership of land so I think pragmatism is quite important because a lot of policymakers become very ideological and they try to stick to that ideology while the world is moving on and you are not adapting to the changes in the world and then we come to the issue of implementation capabilities effective policy implementation requires capable people but unlike what most people think this doesn't mean hiring more economists for example, World Bank, IMF when they do capacity building program for policy improvement in developing countries their idea is basically to send people to Harvard and Oxford to get a degree in economics well, let me tell you the public officials that were behind the so-called East Asian miracle were largely not economists in Japan they were almost entirely lawyers in Korea they were more economists but they had very high proportion of lawyers and some engineers in China, in Taiwan they are mostly scientists and engineers and what little economics they knew were not free market economics not neoclassical economics especially in Japan there's a very strong influence but economists like Marx, Friedrich List and Joseph Schimpeter so they operated with these ideas basically what makes successful policymakers is different from what makes successful economists these people, yeah they need to know some economics but they need to have general intelligence the ability to learn skills to manage complex projects and the ability to maintain organization coherence what the qualities that are required for good policymakers is not the knowledge of economics also you have to remember that administrative capabilities are not simply possessed by individuals but also by organizations so what kind of command structure do you have what kind of institutional routines you have how you keep institutional memories what kind of records and archives do you have how do you rotate people between jobs so that you do not become silos how do inter-departmental coordination happens these things are far more important than what economists usually think and finally you need to design good incentive system for the recipients of industrial policy supports they need to be rewarded and punished according to performance there are many cases where the government only gave support and never punished the non-performers I mean the old regime in India is a classic example you had all these infant industries not transitioning into becoming other industries but sick industries so you don't grow up and then you are under protection for 30, 40 years and you cannot survive without protection so that's a clear failure of the incentive system for the recipients of your support of course you need state with embedded autonomy it has to be a state that is not hostile to business it has to understand the business world it has to have channels to discuss things with the business sector but not beholden to it because sometimes you have to make tough decisions and say well you had all this support nothing has changed we are going to cut this if you can announce the targets if you can announce the performance indicators and if you can announce the measures that you are going to take if things fail to go in the right way in advance it becomes more difficult to manipulate them through lobbying so that was the function of these five year plans that was the function of so many industrial policy documents white papers, green papers whatever research outputs from government-related research institute produced in countries like Japan and Korea and I think one last comment is that the discussion in this lecture shows how the real world is much more complex than economic theories knowledge it also shows how economic theories are often behind real world practices you know this supposedly new idea of information externality I mean that had been practiced in Malaysia for the last 50 years I mean with some mixed success and it also shows how real world successes and economic policies have often been made without the contribution of economists some may even say that because there was no contribution from economists I don't want to end this lecture in a negative way by suggesting that economics is useless but looking at these real world examples and analyzing different success cases you have to recognize the limitations of abstract theories and be more humble about what you can tell other people to do