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Conditions and Mechanisms for Industry Policy to Succeed

Sep 20-2022   



Preliminary research of three strategic emerging industries - display, integrated circuit, and new-energy car - has yielded findings concerning the conditions and mechanisms for industry policy to succeed.

 

The research was undertaken by Fan Baoqun, PKU NSD Jinguang Chair Researcher, NSD Associate Dean, BiMBA Executive Associate Dean; Chen Xiaohong, Researcher of Development Research Center of the State Council; and Liu Chao, NSD Assistant Researcher. The paper has been published by China Economics.

 

Strategic emerging industries are defined as those that are based on significant technological breakthroughs and vast development needs, play an important role in leading and driving the comprehensive and long-term development of the economy and the society, and are characterized by being knowledge and capital-intensive, having enormous growth potential, and offering superior overall returns.

 

By utilizing Industrial Chain and Value Chain Based Holistic Policy Analysis (ICVC-HPA) and paying special attention to the ‘set-up cost’ theory, the research looked into the connections between policy and industry through the prism of three industries and assisted to form a policy system that is rooted in company demand, covers industry value chains and prioritizes key aspects.

 

The researchers found that the initiation of policy for strategic emerging industries stems from the interactions among the government, the market and various elements with the aim of promoting the development of specific industries and their structural upgrading. Such policy and auxiliary ones should be designed and implemented – as well as adjusted - according to policy goals, the nature of policy tools, and characteristics of industrial value chain. For the formulation, finetuning and perfection of such policies, a key factor and indispensable mechanism lies in the interactions between the government and enterprises. In addition, countries in the process of catching up with developed ones can do well with strategic emerging industry policy provided that the policy can address critical issues and make timely adjustments. Lastly, the success of such policy relies on a necessary condition that sees key policy and system rooted in the situations of the specific country as well as organically combined with the improvement in market and corporate capabilities.

Conditions and Mechanisms for Industry Policy to Succeed

Sep 20-2022   



Preliminary research of three strategic emerging industries - display, integrated circuit, and new-energy car - has yielded findings concerning the conditions and mechanisms for industry policy to succeed.

 

The research was undertaken by Fan Baoqun, PKU NSD Jinguang Chair Researcher, NSD Associate Dean, BiMBA Executive Associate Dean; Chen Xiaohong, Researcher of Development Research Center of the State Council; and Liu Chao, NSD Assistant Researcher. The paper has been published by China Economics.

 

Strategic emerging industries are defined as those that are based on significant technological breakthroughs and vast development needs, play an important role in leading and driving the comprehensive and long-term development of the economy and the society, and are characterized by being knowledge and capital-intensive, having enormous growth potential, and offering superior overall returns.

 

By utilizing Industrial Chain and Value Chain Based Holistic Policy Analysis (ICVC-HPA) and paying special attention to the ‘set-up cost’ theory, the research looked into the connections between policy and industry through the prism of three industries and assisted to form a policy system that is rooted in company demand, covers industry value chains and prioritizes key aspects.

 

The researchers found that the initiation of policy for strategic emerging industries stems from the interactions among the government, the market and various elements with the aim of promoting the development of specific industries and their structural upgrading. Such policy and auxiliary ones should be designed and implemented – as well as adjusted - according to policy goals, the nature of policy tools, and characteristics of industrial value chain. For the formulation, finetuning and perfection of such policies, a key factor and indispensable mechanism lies in the interactions between the government and enterprises. In addition, countries in the process of catching up with developed ones can do well with strategic emerging industry policy provided that the policy can address critical issues and make timely adjustments. Lastly, the success of such policy relies on a necessary condition that sees key policy and system rooted in the situations of the specific country as well as organically combined with the improvement in market and corporate capabilities.