A Critical Element Of Industrial Economics

INDUSTRIAL ECONOMICS
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Industrial Economics
Industrial economics is a distinct branch of economics that deals with the economic challenges that firms and organizations face as well as their relationship with society. It can also be simply defined as the study of firms, industries, as well as markets. It covers all sizes of firms and considers several industries. Making sound and effective decisions are among the most critical actions carried out by any organization. By helping the firm understand issues such as the extent of product differentiation, the output capacity, the set prices as well as the investment in research and development, industrial economics enable the firms to make sound decisions (Devine et al., 2018). Moreover, industrial economics help firms enhance the organization of activities as well as motivation. While other fields in economics largely dwell on profit maximization, industrial economics explores other topics such as market growth. The assessment of the competitiveness of the market is also a critical element of industrial economics. The industrial policy of a country is a critical element of industrial economics. Industrial policy can be defined as the set of rules and regulations that are outlined by a country to govern its industries. This paper seeks to review an article that explores industrial policy in emerging economies.
The article was aimed at exploring the role that industrial policy can play in the transition of economies from middle-income status to high-income status. The focus is on the emerging economies in Europe. A neo-Schumpeterian approach is used to analyze the industrial policy regarding structural transformation (Robert and Yoguel, 2016, p. 10). The author asserts that modern emerging economies are faced with two challenges in their quest to transition to high-income status. They include the challenge to catch-up with the current technology as well as the challenge to adjust to the technological change of the advanced economies in the backdrop of social and environmental constraints. Moreover, the transformation is limited to the state’s capacity. The authors recommend that emerging economies should employ sector-based horizontal policies to address the market as well as state failures in the individual industries.
According to the authors, industrial policy is back stronger than ever before, in both the emerging and advanced economies as a consequence of the global financial crisis. Though the industrial policy has been praised and criticized in equal measure, it is still practiced by different governments in different forms. Though industrial policy was meant to create employment and economic growth traditionally, more...