How Nations Succeed: Manufacturing, Trade, Industrial Policy, and Economic Development
by Murat A. Yülek (Author)

About the Author
Murat A. Yülek is the Director of the Centre for Industrial Policy and Development at Istanbul Commerce University and has also taught at Georgetown University. A widely published former IMF econo-mist and a corporate executive, he has had responsibilities that include corporate finance, development and macroeconomic policy in various countries.

About this book
This book assesses developmental experience in different countries as well as British expansion following the industrial revolution from a developmental perspective. It explains why some nations are rich and others are poor, and discusses how manufacturing made economies flourish and spur economic development. It explains how today’s governments can design and implement industrial policy, and how they can determine economically strategic sectors to break out of Low and Middle Income Traps.
Closely linked to global trade and (im)balances, industrialization was never an accident. Industrialization explains how some countries experience export-led growth and others import-led slowdowns. Many confuse industrialization with the construction of factory buildings rather than a capacity and skill building process through certain stages. Industrial policy helps countries advance through those stages.
Explaining technical concepts in understandable terms, the book discusses the capacity and limits of the developmental state in industrialization and in general in economic development, demonstrating how picking-the-winner type focused industrial policy has worked in different countries. It also discusses how industrial policy and science, technology and innovation policies should be sequenced for best results.

Table of contents
Part I Industrialization Was Never an Accident: Colonialization, Monopolized Trade, and Industrialization1
1 The Old World Order: Trade Before the Empires on which the Sun Never Set 5
    1. 1 Eurasian Trade: Reverse Flows of Merchandise from Asia Versus Gold from Europe 5
    1. 2 Economics and Commerce in Medieval Europe Prior to European Geographical Explorations 7
    1. 3 The Silk Road and the Spice Route in Medieval Times: The Mediterranean as Part of Global Trade 7
    1. 4 Venice Reaches the Zenith of Power in the Mediterranean 9
    References 12
2 The Pre-Industrial New World Order: Colonial Empires on Which the Sun Never Set 13
    2. 1 Winners, Losers, and Definite Losers of the New World Order 13
    2. 2 For Spices and Christians: Portuguese Trade Deficit and Colonization 15
        Portugal’s Global Expansion 16
    2. 3 Spanish Expansion into the Americas 19
    2. 4 The Colonizer of the New Age: Britain’s Ascendance to a Global Power 21
        Britain’s Merchant Adventurers: Pioneers of British Global Expansion 21
        The First Phase of English Global Expansion: Colonization of North America 23
        The Joint Stock Company, the Crown’s Charter, and the Colonies 25
        The Second Phase of British Global Expansion: The British East India Company and the Colonization of India 27
        The Dutch: England’s Friend and Also Foe in the Quest for Domination of Global Trade in the Seventeenth Century 31
        The Simple Economics of the British Colonies in America 34
    References 37
3 British Colonial Empire and Industrial Policy: Protection, Monopolized Trade, and Industrializatio n 39
    3. 1 Britain’s Trade Prior to the Industrial Revolution 40
    3. 2 The Industrial Revolution and the Expansion of Trade in the Eighteenth Century 43
    3. 3 British Industrial Policies as the Driver of British Industrializatio n 45
        Inviting Textile Masters to Britain: Learning and Technology Transfer Before the Industrial Revolution 47
        Import Substitution and Infant Industry in the Fourteenth Century: Shifting England’s Exports from Raw Wool to Textiles 49
        British Navigation Acts: Development of British Shipping and Shipbuilding Industries 51
        Monopolizing the International Trade of Colonies: Running Current Account Surpluses by Prohibiting Manufacturing in the Colonies 52
        The Triangular Trade 54
    3. 4 India Before and After British Invasion 55
        Manufacturing ‘Good’ Indians 58
    3. 5 The Story of Cotton: Slaves, India, and British Industrial Revolution 60
        Banning Imports of Efficient Indian Cotton Textiles 61
        Turning Britain into a Cotton Textiles Manufacturer 62
        USA Becomes the Source of Raw Cotton 63
        Cotton: The Critical Commodity 64
        Cotton and Slavery 66
    3. 6 Free Trade Agreements, Free Trade of Opium, and the Collapse of China 67
        Britain Extends Beyond India 67
        China and Britain 68
    References 76
4 How Industrialized Nations Industrialized 79
    4. 1 Hats, Tea, and Liberty: The American Quest for Manufacturing 79
        What the Colonial Laws Meant for the Colony 80
        Bad Finance at Home, Bad Taxes in the Colonies 81
        Founding Fathers of American Manufacturing and the USA 82
    4. 2 Japan’s Industrial Policy and Late Industrializatio n in the Nineteenth Century 84
        Frightening Black Ships in Edo 85
        The Unfair Treaties 86
        The Coal … 88
        Japanese Industrializatio n in the Meiji Period 88
        Industrial Policies in the Meiji Period 90
        Japan as an Industrialized Nation 93
    4. 3 French Way of Picking the Winners: Colbert’s Industrial Policies in the Seventeenth Century 94
        Making France a Textile and Glass Country 96
        Educational Reforms 98
        France as an Industrialized Nation 98
    4. 4 Germany: Another Late Industrializer 99
        Economic Unification, Patriotism, and Industrializatio n 100
        Germany as an Industrialized Nation 102
    4. 5 Beginning of Russian Industrializatio n: Peter the Great’s Great Technology Transfer Story in the         Eighteenth Century 102
        Peter’s Crusade for Inward Technology Transfer 104
        Russia as an Industrialized Nation 104
    References 106
Part II Manufacturing109
5 The ‘Why’ of Manufacturing  111
    5. 1 The ‘Fall’ of Manufacturing 112
    5. 2 Is Manufacturing a Poor Man’s Business?  114
    5. 3 World Trade and Manufactures: What Do Rich and Poor Countries Export?  117
    5. 4 Manufacturing and Growth 123
    5. 5 Linkages of the Manufacturing Industry 126
    5. 6 Why Then Does the Share of Manufacturing in Output Falls as Economies Grow?  129
    5.7 The Smile Curve and the ‘New’ Product Cycle: Does All Manufacturing Always Make Money?  133
    References 139
6 Global Imbalances: Export-Led Growth Versus Import-Led Slowdown 143
    6. 1 Trade and Macroeconomics 145
    6. 2 Germany and Its Export-Led Growth 146
    6. 3 Why Do Imports Lead to Economic Slowdown and Unemployment: A Simple Explanation by the Macroeconomic Identities 148
    Employment Effects of Imports 152
    References 153
7 Value Added and GDP: The Smart Versus the Donkey 155
    7. 1 Value Added, GDP, Factor Accumulation, and Productivity 155
    7. 2 How to Increase the Value Added and the GDP: The Donkey Work Does Not Do the Work 158
    7. 3 How to Increase the Value Added: The Smart Work 162
    7. 4 Industrial Policy: South Korea’s Smart Work 164
    References 167
Part III Industrial Policy169
    8 The Industrializatio n Process: A Streamlined Version 171
    8. 1 The Scientific Revolution and Its Precursors 171
    8. 2 Industrializatio n 174
        The Evolution of Industrializatio n: From ‘First’ to the ‘Fourth’ Industrial Revolution 175
    8. 3 A Streamlined Process of Industrializatio n 176
        Where Is Your Country Located in the Industrializatio n Process?  179
    References 181
9 The Industrial Layer 183
    9. 1 The Industrial Entrepreneur 185
        The Entrepreneur and Economic Development in the Economic Literature 186
        The Commercial Entrepreneur and the Industrial Entrepreneur: The Same Breed?  187
        The Industrial Entrepreneur: Three Case Studies 190
    9. 2 Industrial Labour 193
    9. 3 Industrial Finance 194
    References 195
10 Industrializatio n as Capacity Building: Skills, Technical Progress, and Technical Capabilities 197
    10. 1 The Latecomer Industrial (Manufacturing) Firm, Technical Capabilities, and Learning 201
    10. 2 The Industrial Firm as a ‘Learning Firm’ 202
    References 205
11 The State and State Capacity 207
    11. 1 State Capacity and the Developmental State 208
    11. 2 Steering Capacity 209
    11. 3 Market Failure Versus Government Failure 210
    11. 4 The Educational System 211
        German Educational System: A Good Case of How Education Supports Business and Industry 212
    References 215
12 The ‘ How ’ of Manufacturing: Industrial Policy  217
    12. 1 Why Industrial Policy in Developing Economies? The Middle-Income Trap 217
    12. 2 Is a Country Certain to ‘Naturally’ Industrialize in the Full Range? General and Sectoral Industrial Policy Along the Industrializatio n Process 220
    12. 3 How to Pick the Winner? Strategic Manufacturing Sectors 224
        Economic Value Added Potential 226
        Learning Depth (Potential): The Firm as a Repository of Knowledge, Skills, and Institutional Capacity 228
        Technological Depth 230
        Linkages 230
    12. 4 Sequencing Industrial and STI Policies 232
    12. 5 Development-Based Public Procurement 234
    References 236
13 Industrial Policy: Some Case Studies from Today’s World 239
    13. 1 The Nuclear Power Programme: How South Korea Developed Its Indigenous Capabilities in Nuclear Power Generation and Converted It into an Export Industry 239
        Stage I: The Beginning: Introduction of Nuclear Energy Research and Building Up Manpower and Infrastructure (1956–mid-1960s) 241
        Stage II: Introduction of Turnkey Power Plants (mid-1960s–mid-1970s) 241
        Stage III: Localization of Engineering Services and Equipment (mid-1970s–1985) 246
        Stage IV: Learning by Doing: Furthering the Localization by the Acquisition of Core Technologies (1985–2009) 248
        Stage V: Learning by Exporting (2009 Onwards) 251
    13. 2 How South Korea Developed Its Indigenous Automotive Industry 254
        Stages of the Development of S. Korea’s Indigenous Automobile Industry: The First Attempts (1960s) 255
        Long-Term Automobile Industry Promotion Plan (1970s): Local Production and Export Starts 255
        1980s Onwards: The Global Player 257
    13. 3 Sweden’s Industrial Policy in the Aviation Sector: Saab as a National Champion 258
        The Driving Force: Industrial Policy in the Defence Sector Spurring the Domestic Industrial Capacity in the Aviation Sector 260
        Founders of Saab: The Second Driver of Swedish Indigenous Aviation Industry 260
        Earlier Aircraft Manufactured by Saab 263
        Venturing into Other Areas: Civilian Aviation, Automotive Sector, and Rifles 264
    13. 4 Airbus: Europe’s Industrial Policy Response to the Domination of the Civilian Aircraft Market by America’s Boeing 265
        The Background 267
        The Genesis and the Rise of Airbus 267
        The Tribulations of Multinational Shareholding 268
        Economic Impact of Airbus on Europe 268
    References 270
14 Putting It All Together: How Nations Succeed Through Industrial Policy?  273

Length: 284 pages
Publisher: Palgrave Macmillan; 1st ed. 2018 edition (September 22, 2018)
Language: English
ISBN-10: 9811305676
ISBN-13: 978-9811305672

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