«I. Introduction Green growth can be defined as a trajectory of economic development that fully internalizes environmental costs, including most ...»
Experience with central banking shows that it is professionalism and reputation that
legal independence. A similar reality holds for agencies in charge of industrial policies as well. The vaunted Defense Advanced Research Projects Agency (DARPA) provides an apt illustration in the United States. DARPA has been behind some of the most dramatic technological breakthroughs of our time, including the Internet, GPS and satellite imagery. Few doubt its capacity to experiment with highly speculative technologies – as well as pull back from efforts that are not paying off. It works closely with private sector firms in so-called “dual use” technologies. But it is not known for being manipulated by commercial firms or politicized. It has been insulated and protected by the technical competence and esprit de corps of its staff and, ultimately, by its repeated successes (Greenwald 2013).
In summary, discipline requires clear objectives, measurable targets, close monitoring, proper evaluation, well-designed rules, and professionalism. With these institutional safeguards in place, it becomes easier to revise policies and programs along the way, and to let losers go when the circumstances warrant it.
(iii) Accountability Embeddedness and discipline are two sides of the same coin, establishing the acceptable boundaries of the relationship between public agencies and the private sector. They facilitate communication and collaboration between the two while ensuring that public officials retain sufficient autonomy and have the ability to deploy a stick when needed. However, the purpose of green industrial policy is to further the public good at large, not the interests of the two parties in this relationship, bureaucrats and private firms. Therefore a third element of the institutional architecture must be public accountability. Public agencies must explain what they are doing and how they are doing it. They must be as transparent about their failures as their successes.
Accountability not only keeps public agencies honest, it also helps legitimize their activities.
Accountability is an integral feature of democracy. One of the puzzles of East Asia is how
democratic controls. One explanation is that there were alternative mechanisms of accountability in place. In South Korea, bureaucrats setting and implementing export targets during the 1960s and 1970s were closely monitored by higher-ups, including most notably President Park Chung-hee himself. In Singapore, one may surmise that the very high level of pay (and, relatedly, professionalism and skill) of officialdom prevents corruption and abuse. In China, despite rampant corruption, regional competition for investment and fiscal revenue compels local officials to remain business-friendly.
Even within democracies, accountability can be improved in a number of ways. The appointment of a high-level political champion for green industrial policies not just helps with coordination, but also identifies a clear figure who can be held politically responsible. A vicepresident, minister, or other political official with visibility can serve in such a role. Transparency can be enhanced by a pro-active communication strategy. Agencies can publish, among others, minutes of meetings with firms and industry groups, regular reports on activities and budgets, and periodic audits by independent experts. The greater the openness and transparency at the outset, the less likely that industrial policies will be overwhelmed by real or imagined scandals down the line.
V. Concluding remarks It will take concerted effort by governments to avert the threat of catastrophic climate change. One plank of the needed strategy is industrial policy, to stimulate and facilitate the development of green technologies. The fact that many governments are already embarked on such policies for reasons of international competitiveness or job creation provides a mixed opportunity.
On the one hand, it engages governments in certain useful activities that they might not have been interested in on account just of climate change or control of GHGs. On the other, it makes it difficult for the policies to be targeted on the right targets and designed appropriately.
In practice, we are unlikely to get purely green industrial policy, focusing directly on the
employment, or fiscal motives. Indirect, but politically salient objectives such as “green jobs” will likely continue to present a more attractive platform for promoting industrial policy than alternative energy or clean technologies. Occasionally, such objectives will clash directly with technological goals, as in the case of American and European protectionism in solar panels.
From a global standpoint, it would be far better if national competitiveness concerns were to lead to a subsidy war than a tariff war. The former expands the global supply of clean technologies while the latter restricts it. So far, that is largely what we have been getting. But there is no guarantee that we can extrapolate this trend into the future. A pragmatic approach would consist of improving the general practice of industrial policy, along the lines sketched out in the previous section, while gently nudging policy makers in the direction of greater awareness of how it
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