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The Washington Consensus ReconsideredTowards a New Global Governance$
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Narcís Serra and Joseph E. Stiglitz

Print publication date: 2008

Print ISBN-13: 9780199534081

Published to Oxford Scholarship Online: May 2008

DOI: 10.1093/acprof:oso/9780199534081.001.0001

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The Wild Ones: Industrial Policies in the Developing World

The Wild Ones: Industrial Policies in the Developing World

(p.95) 7 The Wild Ones: Industrial Policies in the Developing World
The Washington Consensus Reconsidered

Alice H. Amsden (Contributor Webpage)

Oxford University Press

Globalization can only be realized by developing countries if they have their own nationally-owned companies that invest abroad. The devil lies in the details to assess the virtues for economic development of foreign multinationals versus private national firms. In perfectly competitive, labour intensive industries, both types of firms should be welcomed for their job formation. But in the broad range of mid-tech industries, where inputs are scarce and tacit technologies and brand-names act as entry barriers, one type of firm can ‘crowd out’ another type of firm. The best professionally-managed local companies outshine the multinational subsidiaries in terms of entrepreneurship, time to market, and an absence of bureaucracy. In high-tech, the type of research foreign multinationals undertake even in countries like China and India tend to be less innovative than what local leaders undertake. Governments should, and do (through loopholes in WTO law), promote private nationally-owned enterprises. The world is better as a result because as Third World companies thrive, there is more genuine competition.

Keywords:   entrepreneurship, developing countries, foreign investment, multinational countries, WTO, China, India

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