Korean Industrial Policy: Legacies of the Past and Directions for the Future, Parts 63-197

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World Bank Publications, 1993 - Business & Economics - 41 pages
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The World Bank is changing the way it does business in the energy sector. This Policy Paper is one of two that outlines the Bank's new policies for the sector. The review was prompted by concern about the effects of power generation on the environment and on populations that may be resettled to make way for projects. Another stimulus was the macroeceonomic reality of fewer investment resources in many countries. And many developing countries are becoming more receptive to reforming the way energy is produced and consumed. This paper credits the public monopoly approach of the last 30 years with facilitating expansion of power supplies, capturing technical economies of scale, and making effective use of scarce managerial and technical skills. Nonetheless, it recommends several new policies to improve the performance of the electric power sector in developing countries. These reforms will guide future Bank activities in the sector. Bank loans for electric power will go first to countries clearly committed to improving the performance of their power sectors. The Bank will also discourage subsidies on energy prices and will encourage private investment in utilities. And it will provide financing to help the least developed countries import power where local generation is not practical. The efficiency of production and use of electric power in developing countries is examined in a companion paper, Energy Efficiency and Conservation in the Developing World: The World Banks Role . The World Bank's Role in the Electric Power Sector is also available in Spanish: La funcion del Banco Mundial en el sector de la electricidad. Politicas para efectuar una reforma institucional, regulatoria, y financieria eficaz. (ISBN 0-8213-2451-9) / Stock No. 12451 / $7.95 / Price code 007 / Spanis
 

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Page 21 - with private business and by focusing more attention on public goods such as safety, environmental protection, and infrastructure. To do so requires the strengthening of financial institutions to provide the oversight of the use of the nation's considerable savings and a clear regulatory structure to ensure its fair application. In the following sections, we
Page 4 - The range of available, legal instruments has sharply narrowed over time. Many of the instruments of industrial policy have been controlled or declared illegal by international agreements. Protection through tariffs has been gradually eroded by successive GATT rounds. The direct use of subsidies in export-oriented industries has been curtailed under the
Page 4 - Thus the decision to adopt an active industrial policy ultimately involves the weighing of costs and benefits. The question is not whether a particular industrial objective is desirable, but whether industrial policies make the achievement of the objective more likely, and whether the incremental contribution outweighs the risks and costs involved.
Page 1 - and to maintain market shares in key world markets. Yet the most visible instruments of Korean industrial policy, including especially credit policy, have been inherited from a simpler economy. These tools are not well adapted to addressing the country's new economic objectives and are rapidly becoming
Page v - Korean industrial policy, which has guided the Korean economy through nearly three decades of spectacular growth, is showing its age. The policy has not been adjusted fully to the new challenges facing the economy, and it has not recognized the obsolescence of its key instruments.
Page v - In addition to complexities of the transition, the government will have to maintain macroeconomic stability and the momentum of savings and investment, tackle the "new" market failures associated with Korea's rising technological level, and develop new institutions to increase the flow of information, reduce
Page v - the time has come, as in other advanced industrial countries, to disengage the government from managing the economy's structural development and to adopt a new compact to delineate the responsibilities of business and government.
Page 3 - Moreover, given the possibility that politically strong groups can manipulate industrial policy, the support for an active approach is likely to be greatest in countries that have powerful special interests. For these reasons,
Page 1 - right" industrial policy depends on constantly changing factors: the nature of market failures facing the economy, and the scope and effectiveness of policy instruments available to government. Some market failures vanish with
Page 3 - Even correctly targeted intervention has costs. The taxes required to finance industrial subsidies, for example, withdraw resources from other activities and distort economic decisions in the taxed sectors of the economy.

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About the author (1993)

Leipziger is manager of the Economic Development Institute's Regulatory and private Sector Division, The World Bank.