I need help with finding an example of industrial policy and analyzing it. What are the reciprocal obligations of the industry and government in such a policy? Are limits placed on the business'...

I need help with finding an example of industrial policy and analyzing it. What are the reciprocal obligations of the industry and government in such a policy? Are limits placed on the business' scope of action so that it cannot accept any assistance without meeting some criteria for using the assistance?

Asked on by talgura

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thanatassa | College Teacher | (Level 3) Educator Emeritus

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Industrial policies cover a wide range of different types of government support for industry, ranging from price supports to protective tariffs and from creating incubators or free trade zones to outright grants or interest-free loans. Often these policies are geared to what are considered strategically important industries, ones affecting national security directly, as in military technology, or indirectly in such matters as food and resource independence.

One key example of an industrial policy is Japan's support for its native rice industry, often seen by other countries as an extreme form of protectionism. Rice farmers form an important block of voters, especially in rural districts in Japan. Partly as a form of sustaining a national tradition and partly as a way to get votes, Japanese governments have devised an extensive system of price supports to prop up Japan's notoriously inefficient rice industry, leading to consumer prices significantly higher than those in the rest of the world. These price supports keep small-scale farmers in business, with the government buying any surplus rice the farmers cannot sell or consume. The regulatory environment makes it difficult to aggregate small plots into larger farms or lease farms, and there are incentives to sell rice through the Japan Agricultural Group, limiting the independence of more innovative and entrepreneurial farmers.

This would be a particularly good topic to choose at Japanese rice protections are one of the controversies involved in current negotiations over the Trans-Pacific Partnership (TPP).

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