Developmental states and industrial policy in the automotive industry

Abstract

The main finding of this study is that developmental states still hold opportunities and capacity for the promotion of economic development, even if current circumstances present a more reduced or different policy space than what their dirigisme or authoritarian counterparts in the late 19th and 20th centuries faced. This study presents the compared cases of Mexico and Korea (South Korea or Republic of Korea) as two newly industrialized countries that have developed their automotive sector with very similar, developmental state-led, industrial policies. In both countries, outcomes had different degrees of success depending on the circumstances and constraints for policymaking and implementation existing in each society. The main argument is that although these political and institutional circumstances, unique to each state and society, can constrain policy options and shape their outcomes, they can also create new policy opportunities, which are frequently overlooked. Understanding and leveraging these lessons towards developmental efforts of today’s developing nation-states is more relevant than ever. With the new trends and directions that are already visible in the automotive industry, it is very important that governments and societies have clarity of what elements made past successes possible, to learn from them and iterate through their own constraints towards the construction of their own unique experiences of economic success.