Modern industrial policy and public-private councils at the subnational level: Mexico's experience in an international perspective

Robert Devlin & Carlo Pietrobelli

#2018-028

In recent years, the need for modern industrial policies has been increasingly acknowledged in the literature and by the praxis of developed and developing countries, including much of Latin America. Whether a country should have an industrial policy is no longer in question; rather, the issue is how to do it right. Nevertheless, research is still incipient on the experience with the specific institutional arrangements and governance structure required for effective modern industrial policy, and this is especially true in large countries with developed subnational governance structures. One institutional mechanism considered vital to effective modern industrial policy is the modality of public-private dialogue and problem solving that supports a search for obstacles and solutions to agreed development objectives.

This paper addresses the institutional foundations of industrial policy at the subnational level, with new empirical evidence from a large federal state-Mexico. It presents a detailed analysis of the governance of 32 newly created public-private State Productivity Commissions. All evidence analysed point to the fact that most of these commissions were in a rudimentary state of development after more than three years since the federal law promulgated them. Problems of governance in many ways mirrored issues that often emerge in national councils, but were graver in their depth and covered even the most rudimentary elements. Moreover, the peculiarity of the CEPs emerging out of a federal labour law appears to have generated overly narrow agendas. Central government's entities have a major challenge to provide and mobilise technical, administrative, and possibly financial support for the sub-national commissions.

JEL Classification: F63; F68; L52; O25

Keywords: Economic Development; Industrial Policy; Alliances; Committees; Institutions and Growth; Governance; Positive Analysis of Policy Formation and Implementation; Search; Federalism; Mexico