Search

Thirty years after the region embarked on large-scale liberalization, trade policy could have been expected to become all but irrelevant. Instead, a mismatch between expectations and what could realistically be delivered set the stage for much of the disappointment, skepticism, and fatigue regarding trade policy in the region, particularly in the early 2000s. By setting the bar unrealistically high, governments and analysts made trade policies an easy target for special interests that were hurt by liberalization and for those ideologically opposed to free trade. The most immediate victims were the more tangible growth and welfare gains, whose relevance was lost amid the noise of grandiose visions. Liberalization made most countries better off, on the back of substantive productivity gains. The growth results are also impressive. On the other hand, the employment and inequality outcomes fell short of expectations. Acknowledging these lessons on the limits of trade and investment policies and the need for complementary action is important, but putting together an effective policy agenda for the future involves other challenges—some old, some new—brought on by geopolitical and technological changes. Trade is a hot issue in today’s world, and this book provides informed suggestions on how Latin America and the Caribbean can successfully confront this heat.

Productive development policies (PDPs) are notoriously hard. They involve a daunting level of technical detail, require public-private collaboration, are in constant danger of capture, and demand time consistency hard to achieve in a politically volatile region. Nevertheless, the potential of PDPs to revitalize the region’s economic performance and spur productivity growth cannot be ignored. This book takes an in-depth look at 17 cases involving productive development agencies from Argentina, Brazil, Costa Rica and Uruguay, identifying key features of institutional design and agency-level practices that make success more likely in this difficult policy arena. Careful study of these experiences might help successful productive development policies gain currency across the region. The cases in this book should not be seen as the exceptions that prove the rule of lackluster PDP performance, but rather as examples that demonstrate the rule can be broken.

This paper discusses the organizational structure and technical, operational and political capabilities required for successful productive development policies (PDPs). It also discusses how countries can match their PDPs to existing capabilities, as well as expand their capabilities in the long run. The specific difficulties associated with PDPs are also discussed.

This synopsis reviews the analysis of market failures that lies behind the conceptual framework, a few highlights of its application in key areas such as innovation, and the institutional requirements for successful policy interventions. Together, this synopsis and the table of contents provide just a taste of the rich information and valuable policy implications that distinguish this year's edition of the DIA.

Public-private collaboration in productive development policy in Costa Rica frequently takes the form of policy co-governance: an autonomous institution in charge of policy for a particular economic sector is created, with a board of directors comprising representatives from both the public and the private sectors, often with the public sector in a minority position. This paper analyzes five cases of co-governance: tourism, fisheries, rice, coffee, and the attraction of foreign direct investment (FDI). When co-governance has been used in conjunction with market discipline and as a means to discover and remove obstacles to higher productivity, as in tourism and FDI attraction, PDPs have been quite successful. When, on the contrary, it has been used to shield producers from market discipline or to allow unsustainable use of natural resources, as in rice and fisheries, they have turned into failures. Coffee stands in between, with considerable social achievements but only modest competitiveness achievements.

Productive development policies (PDPs), what used to be called industrial policies, are increasingly recognized as an essential part of the development toolkit, and the need for public-private cooperation is increasingly viewed as a key element for the successful design and implementation of such policies. If so, how should the cooperation be organized and how should the public sector organize itself to successfully participate in it? This paper suggests that public sector organization should be a response to three key variables: the scope of the PDP, the scope of the intended cooperation, and the organizational characteristics of the private sector. It further proposes the appropriate selection of public sector participants; the alignment of policy, political, and organizational time frames; the ensured quality of the bureaucracy; the protection against private and bureaucratic capture and against unbounded financial risk; and a reasonable regulatory environment of key elements for success.