For the past one-half century, most emerging and low-income countries have not been able to reduce their income gap with advanced countries. Standard growth policy prescriptions that include an enabling business environment, macroeconomic stability, and minimum state intervention and regulations, may be insufficient. In recent years, the argument in favor of state intervention, and in particular, industrial policy, has also been gathering momentum. 

In their presentation, Fuad Hasanov and Reda Cherif discussed why exporting activities of domestic firms and local technology creation is key to sustaining productivity gains. Local technology creation can happen when firms compete in international markets and climb the ladder of high added value while enforcing market discipline and accountability. Meantime policy-makers have to design policies that facilitate investment in purpose-specific skills and infrastructure, changing incentives for firms and workers.

Fuad Hasanov is a Senior Economist at the International Monetary Fund (IMF) and an Adjunct Professor of Economics at Georgetown University. Since joining the IMF in 2007, he has worked as an economist for several emerging countries and natural resource producers and conducted training of IMF staff and government officials. Reda Cherif joined the IMF in 2008 and worked in several departments on fiscal issues, macroeconomic analysis of emerging and developing countries, and economic training of government officials. His research focuses on development economics, natural resources, fiscal policy, and growth and innovation.

Christian Ketels as discussant talked about the type of policies governments can apply to enhance productivity and innovation. He also talked about the key drivers of prosperity and compared different development approaches. 

Dr. Christian Ketels, is a member of the Harvard Business School faculty at Professor Michael E. Porter’s Institute for Strategy and Competitiveness. He holds a PhD (Econ) from the London School of Economics and further degrees from the Kiel Institute for World Economics and Cologne University.

Interested in finding out more? Watch the full presentation on the live stream channel of Entreprenörskapsforum.