## Introduction — Institutions for Industrial Policy (wpiea2026063-source-pdf)

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### Overview and motivation
- Characterizes the second and third decades of the 21st century as the time of the Great Resurgence of Industrial Policy and associated controversy.
- Asserts broad consensus on state intervention when externalities and imperfect information are present.
- Notes empirical evidence and historical case studies showing Japan, Korea, Taiwan Province of China, Singapore, and Hong Kong SAR relied heavily on industrial policy in moving from middle-/low-income to high-income status.
- Central challenge: government failures, corruption, limited financial and human resources, political-economy constraints, and concerns that successful industrial policy requires centralized/authoritarian regimes.
- Paper’s aim: explore institutional design for successful industrial policy through institutional “hardware” (an agency to target sectors, accumulate knowledge, coordinate policies) and institutional “software” (operational features).

### Institutional hardware: leading agency and coordination
- Stylized theory: a “leading agency” central to a distributed state apparatus accumulates sector-specific tacit knowledge (metis) and coordinates policy actions x_i to address sectoral requirements K_i.
- Key assumptions (verbatim):
  - Assumption 1. Non-monolithic state: The state is not made up of a single unitary structure, and state policy actions are scattered among many agencies and ministries, which are endowed with their own specific mandates and objectives.
  - Assumption 2. Sectoral structure of the economy: The economy consists of different sectors, existing and potential. Each sector has its own set of requirements needed to develop, including tackling sector-specific market failures and providing sector-specific public (and quasi-public) goods and services. The sectors differ in terms of their scale, productivity, technological, learning, and spillover potential. We describe the sectors that are superior along these dimensions as “sophisticated.”
  - Assumption 3. Sector-specific requirements and industrial policy: The performance of a sector depends on the extent to which policies implemented fulfill the sectoral requirements (as defined in Assumption 2). The state needs to tackle not only “government failures” (public goods, regulations, education, etc.), which broadly translate into horizontal or general policies, but more important, a myriad of sector-specific “government and market failures,” necessitating vertical or sector-specific interventions.
  - Assumption 4. Policy design and sector-specific knowledge: Uncovering sector-specific requirements and the associated industrial policies requires learning to acquire a set of specialized knowledge. The full package of industrial policy actions are a priori unknown and shifts over time, and uncovering them requires learning and continuous accumulation of knowledge, which we describe as metis, that is, a context-specific, dynamically accumulated, and mostly tacit knowledge stock that can only be acquired through experimentation, feedback from the private sector and other state agencies, and action.
  - Assumption 5. Power structure: The state of political economy is important for policy implementation. The required policy actions for the performance of a sector can interfere with the objectives and actions of other state or private sector actors, within the public sector (e.g., turf battles, nepotism) and outside of it (e.g., corruption, rent seeking). Different power structures produce different institutional structures and economic outcomes.
- Coordination-cost insight:
  - Without a leading agency social communication cost ∝ n×(n-1); with a leading agency social communication cost ∝ n — large order-of-magnitude reduction.
- Governance implications:
  - Low coordination costs: decentralized approach (high-level council) may suffice.
  - High coordination costs or political uncertainty: centralized leading agency preferable.
  - Hybrid: high-level council plus leading agency with select prerogatives (finance, trade, R&D) depending on context.
- Organizational implications:
  - Leading agency should combine sectoral divisions (to build K_i(S)) and horizontal departments (to manage fiscal, inflation, financial stability tradeoffs).
  - Leading agency should be tool-agnostic and avoid ephemeral committees/secretariats that lack continuity and staff needed to accumulate metis.

### Institutional software: the 4As model
- Four required operational features for an effective leading agency:
  - Ambition-Agency: set goals to spur internationally competitive and innovative domestic firms in sophisticated sectors and have the ability to implement policies to attain them.
  - Autonomy: run operations in accordance with the mandate, including autonomy from political interference; secure financial and human resources and convening power to coordinate stakeholders.
  - Accountability: three dimensions—
    - responsibility to the executive branch in fulfilling the mandate;
    - internal control systems ensuring transparency, efficiency, and adherence to goals;
    - holding firms accountable for support received (progress checks, ensuring competition, corrective actions such as restructuring firms or redirecting support).
  - Adaptability: ability to adapt to changing political, economic, and technological conditions via continuous feedback and to adjust focus, tools, and internal structure.

### Political-economy design margins
- Degree of centralization: centralized states may use a council plus agency under highest authorities; decentralized states require a leading agency with broader prerogatives.
- Political stability and cycles:
  - Stable/long-lasting executives: place agency close to the executive to ensure shielding and continuity.
  - Frequent political cycles: detach agency from the executive (analogy with central banks, NASA, NIH) to preserve continuity.
- Coalition strategy: where de facto independence is difficult, a broad coalition supporting the industrial policy mandate is necessary.

### Evidence from East Asian leading agencies (commonalities)
- Long-term, economy-wide mandates aimed at structural transformation and technological upgrading.
- Capability to experiment, iterate, and adapt policies based on continuous feedback from the private sector.
- Organizational forms varied with political contexts but shared need for autonomy, accountability, and adaptability.
- Institutional examples and phrasing preserved:
  - Japan: Ministry of International Trade and Industry (MITI); golden age spanning the period from the 1950s to the 1980s.
  - Korea: Economic Planning Board (EPB); golden age from the 1960s to the 1990s.
  - Taiwan Province of China: Council for Economic Planning and Development (CEPD); golden age from the 1950s to the 1990s.
  - Singapore: Economic Development Board (EDB); golden age from the 1960s to the 1990s.
  - Hong Kong SAR: Industrial and Technology Development Council (ITDC); golden age from the 1970s to the 1990s.

### Key policy recommendations (hardware + software)
- Institutional hardware:
  - Create a leading agency (or tightly knit network of a small number of organizations) to target sectors, accumulate metis, and coordinate policy actions across ministries, agencies, and the private sector.
  - Organize around sector-specific departments and cross-sectoral departments to build K_i(S) and manage macro- and cross-sectoral tradeoffs.
- Institutional software:
  - Ensure the leading agency embodies the 4As: Ambition-Agency, Autonomy, Accountability, Adaptability.
  - Provide long-term, economy-wide mandates to reduce capture risk and enable focus on structural transformation.
  - Design autonomy mechanisms (personnel, financial, policy) adapted to the political economy context.
  - Build accountability systems along three dimensions: executive responsibility, internal controls, and conditionality/monitoring of firm-level support.
  - Institutionalize continuous experimentation, feedback loops, and embeddedness with the private sector to accumulate metis.
- Context-sensitive design:
  - Adapt agency proximity to the executive, prerogatives, and governance form to state centralization and political stability (centralized, hybrid, or decentralized arrangements).
  - Where independence is difficult, pursue broad coalitions supporting the mandate.
- Tool-agnostic approach:
  - Permit the agency to analyze and deploy a wide array of instruments (including legislative changes) as required by sector-specific K_i.
- Coordination efficiency:
  - Centralize knowledge accumulation to reduce communication costs from n×(n-1) to n.
  - Favor sustained institutional capacity (long-term personnel, technical capabilities) over ad hoc committees.

### Structural transformation and internal organization highlights
- Stylized structural shift: light manufacturing → heavy manufacturing → high-tech industries and highly skilled services (e.g., electronics and finance).
- Example sector-share figures preserved:
  - Unspecified sector declined from 30.6 percent to 18.9 percent while electrical machinery and appliances increased from 15.8 percent to 21.8 percent.
- Internal organizational examples:
  - MITI combined vertical and horizontal bureaus (e.g., Machinery and Information Industries Bureau; International Trade Policy Bureau).
  - EPB organized via Industrial Policy Bureau, Social Development Bureau, and Planning and Coordination Office within a network of agencies.
  - CEPD organized sector-specific divisions within its Department for Sectoral Planning.
  - EDB used Cluster Development Division and Enterprise Ecosystem and Planning Division.
  - ITDC governed through a council chaired by the Financial Secretary and included ten representatives (five government, five nongovernmental).

### The 4As in empirical practice — selected numeric and documentary highlights
- Ambition-Agency examples and numeric targets:
  - Hong Kong Applied Research Fund in 1993 provided up to $750 million.
  - Korea target: increase research investment ratio from 2.4 percent of GNP to 3 percent between 1987 and 1991 (Sixth Five-Year Economic and Social Development Plan).
- Autonomy and personnel:
  - MITI established under the 1949 act; in 1991 MITI budget ~one trillion yen vs. government budget >70 trillion yen.
  - EPB (created 1961) placed under the President and led by a Deputy-Prime-Minister-level Minister.
  - ITRI received executive funding without Legislative Yuan approval.
  - Elite recruitment: MITI largely from University of Tokyo; EPB managerial level historically close to 90 percent from Seoul National University.
- Accountability mechanisms:
  - Conditional supports: MITI, EPB, and EDB required export/productivity or job/technology commitments from firms receiving support.
- Adaptability examples:
  - Taiwan halted its sixth four-year plan in 1975 and adopted a six-year plan for 1976–1981 after the 1973 oil crisis.
  - Singapore shifted from manufacturing toward finance after the 1985 crisis and China’s Reform and Opening Up.

### Case study — Taiwan Province of China (semiconductors)
- Context and outcomes:
  - 1960s: ~2,000 science and engineering graduates per year for a population of ~12 million.
  - IT industry production value path preserved: $100 million (1981) → $6 billion (1990) → $34 billion (1998).
  - TSMC market share: 50% (2013).
  - ITRI employed more than 4,000 electronics specialists in the 1980s.
- Institutional actors and devices:
  - CEPD as planning umbrella; ITRI (created 1973) as sectoral technology engine; ERSO acquired by ITRI.
  - STAG (Science and Technology Advisory Group, 1979) composed largely of foreign experts with de facto veto power.
- 4As application:
  - Ambition-Agency: medium-term plans targeting electronics and semiconductors; political alignment (Chiang Ching-Kuo); targeted recruitment and overseas sponsorships.
  - Autonomy: ITRI had personnel, financial, and operational flexibility via executive funding channels.
  - Accountability: centralized early decisions and targets; later decentralization as private sector matured; labs and business development units ensured commercialization and internal checks.
  - Adaptability: CEPD/ITRI spun off firms (e.g., UMC and TSMC origins in ERSO), shifted roles over time, and maintained executive access for rapid decisions.

### Case study — Korea (automotive industry)
- Evolution and scale:
  - 1950s: limited domestic production to low value-added parts.
  - 1980s: car production increased twenty-fold during the 1980s from 50,000 annual production to over 1 million by the end of the decade.
  - Market example: in 1987 overall U.S. car sales decreased by 10 percent while Hyundai’s U.S. sales increased by 56 percent.
- Policy instruments and sequencing:
  - Early phases: preferential loans at negative real interest rates and direct subsidies.
  - Later: Automotive Industry Rationalization Policy (1982) tied rewards/penalties to export performance; restrictions on MNC majority stakes.
- Personnel independence and resources:
  - EPB recruited via meritocratic system; managerial recruitment historically close to 90 percent from Seoul National University.
  - EPB did not need to ask the legislature for budget and kept budgetary independence.
- Accountability, stabilization, and adaptation:
  - EPB insulated itself from outside interests using internal hierarchy and direct executive access.
  - During 1977–1987 money supply (M2) grew by more than 35 percent per year; stabilization policies initiated by the EPB reduced the growth rate to 8 percent by 1984 (EPB 1988).
  - EPB redirected policy after 1980 toward export orientation and functional/economy-wide intervention.
- Industrial outcomes and R&D:
  - From 1976 to 1980 total research investment tripled and private R&D share rose from one-fifth in 1976 to one-third in 1980 (MOST 1985).
- Key numeric tables (preserved exactly):

  - Table 2 — The Expansion of Korea’s Automotive Industry in the 1980s (Export volume / Production volume / Percentage Exported)
    - 1981: 26,283 / 133,084 / 20
    - 1982: 20,284 / 162,590 / 12
    - 1983: 24,510 / 221,019 / 11
    - 1984: 52,350 / 265,361 / 20
    - 1985: 123,110 / 378,361 / 33
    - 1986: 306,369 / 601,546 / 51
    - 1987: 546,310 / 979,739 / 56
    - 1988: 576,134 / 1,083,655 / 53
    - Note: Data from KAMA (2002).

  - Table 3 — Composition of R&D Investments in Korea’s Automotive Industry (1976–80)
    - 1976: Total R&D Investment (million won) 106,220; Share of Government Investment (compared to private investment) 80%
    - 1977: Total R&D Investment (million won) 158,869; Share of Government Investment (compared to private investment) 64%
    - 1978: Total R&D Investment (million won) 202,218; Share of Government Investment (compared to private investment) 61%
    - 1979: Total R&D Investment (million won) 242,900; Share of Government Investment (compared to private investment) 67%
    - 1980: Total R&D Investment (million won) 316,946; Share of Government Investment (compared to private investment) 68%
    - Note: Data from Ministry of Science and Technology (MOST), 1985.

### Concluding institutional lessons
- Effective industrial policy requires a leading agency that accumulates metis and coordinates across government and the private sector.
- The 4A model operationalizes the software needed on top of hardware:
  - Ambition: clear high-sophistication goals and export discipline;
  - Autonomy: personnel, financial, and policy independence adapted to context;
  - Accountability: vertical, internal, and external mechanisms including conditionality for firms;
  - Adaptability: continuous monitoring, feedback, and structural evolution.
- Leading agencies can succeed under different political systems by calibrating proximity to the executive, prerogatives, and governance form.
- The Asian Miracles provide institutional architectures and examples (including numeric program targets and historical planning chronologies) that can inform institutional design for industrial policy.

*Source: IMF Working Paper — Institutions for Industrial Policy (wpiea2026063-source-pdf — Introduction and selected sections as provided).*

### Introduction ...........................................................................................................

### Introduction

### Document structure and major themes
- The PDF's front matter lists major sections with page references:
  - Introduction ......................................................................................................................................................... 5
  - Institutions for Industrial Policy ...................................................................................................................... 10
  - Hardware: The Institutional Structure ...........................................................................................................    10
  - Sector Targeting and Coordination .............................................................................................................. 11
  - A Leading Agency as the House of Knowledge or “Metis” ....................................................................  15
  - The Political Economy of the Leading Agency ............................................................................................. 19
  - The Role of the Leading Agencies in the Asian Miracles ......................................................................   20
  - Mandates ............................................................................................................................................... 22
  - The Long Run Focus ............................................................................................................................. 23
  - Economy-wide Goals ............................................................................................................................ 24
  - Structural Transformation ...................................................................................................................... 25
  - Internal Organizational Structure ................................................................................................................. 25
  - Political Economy Challenges ...................................................................................................................... 29
  - Software: The 4As Model of Institutional Features for Effective Action ....................................................... 31
  - Ambition-Agency    ...................................................................................................................................  31
  - Autonomy .............................................................................................................................................. 36
  - Accountability ........................................................................................................................................   40
  - Adaptability ............................................................................................................................................    44
  - Case Studies ..................................................................................................................................................... 48
  - Building a Silicon Dragon: Taiwan Province of China’s Semiconductor Industry .........................................    48
  - Ambition-Agency    ...................................................................................................................................  49
  - Autonomy .............................................................................................................................................. 51
  - Accountability ........................................................................................................................................   51
  - Adaptability ............................................................................................................................................    52
  - Competing in Sophisticated Sectors on a Global Stage: Korea’s Automotive Industry ............................... 54
  - Ambition-Agency    ...................................................................................................................................  54
  - Autonomy .............................................................................................................................................. 55
  - Accountability ........................................................................................................................................   56
  - Adaptability ............................................................................................................................................    57
  - Conclusion ........................................................................................................................................................ 60
  - References ......................................................................................................................................................... 62
  - Appendix. Historical Background of the Leading Agencies ......................................................................... 73
  - Korea   ..................................................................................................................................................... 73
  - Taiwan    Province of China ..................................................................................................................... 73
  - Singapore .............................................................................................................................................. 73
  - Japan ..................................................................................................................................................... 74
  - Hong Kong SAR ....................................................................................................................................  74

### Central analytical components (as signposted by the TOC)
- Two complementary institutional lenses:
  - "Hardware: The Institutional Structure" (pages 10–29) covering formal organizational features, mandates, long-run focus, economy-wide goals, structural transformation, internal organization, and political economy challenges.
  - "Software: The 4As Model of Institutional Features for Effective Action" (page 31 onward) defining four attributes: Ambition-Agency, Autonomy, Accountability, Adaptability, each with dedicated sub-sections and page references.
- Empirical grounding:
  - Case studies beginning on page 48 that apply the framework to Taiwan Province of China’s semiconductor industry and Korea’s automotive industry, with each case analyzed through the 4As subcomponents.

### Analytical emphasis indicated by section headings
- Focus areas explicitly signposted:
  - Sector targeting and coordination (page 11)
  - The role and political economy of a leading agency, including its characterization as a "House of Knowledge" or “Metis” (page 15)
  - Mandates and long-run strategic focus (pages 22–23)
  - Economy-wide goals and structural transformation (pages 24–25)
  - Internal organizational structures and political economy challenges (pages 25, 29)
  - Institutional attributes necessary for effective industrial policy action (the 4As) and their operationalization across case studies.

### Case-study coverage (explicit breakdown)
- Taiwan Province of China — "Building a Silicon Dragon: Taiwan Province of China’s Semiconductor Industry" (pages 48–52), with subheadings mapping to the 4As: Ambition-Agency (page 49), Autonomy (page 51), Accountability (page 51), Adaptability (page 52).
- Korea — "Competing in Sophisticated Sectors on a Global Stage: Korea’s Automotive Industry" (pages 54–57), with subheadings mapping to the 4As: Ambition-Agency (page 54), Autonomy (page 55), Accountability (page 56), Adaptability (page 57).

### Supplementary materials
- Conclusion (page 60) and References (page 62).
- Appendix with historical background of the leading agencies and country-specific entries: Korea (page 73), Taiwan Province of China (page 73), Singapore (page 73), Japan (page 74), Hong Kong SAR (page 74).

*Source: wpiea2026063-source-pdf - Introduction (table of contents) from the provided PDF file.*

### Introduction

### Introduction

### Overview and motivation
- Characterizes the period of the second and third decades of the 21st century as the time of the Great Resurgence of Industrial Policy and the controversy around it.
- Asserts broad consensus on the economic rationale for state intervention in the presence of externalities and imperfect information.
- Notes mounting empirical evidence and historical case studies that a handful of Asian economies (Japan, Korea, Taiwan Province of China, Singapore, Hong Kong SAR) relied heavily on industrial policy in moving from middle-/low-income to high-income status.
- States the central challenge: government failures, corruption, limited financial and human resources, political-economy constraints, and concerns that successful industrial policy requires centralized/authoritarian regimes.
- Paper’s aim: explore how to conduct successful industrial policy through institutional design — building the institutional “hardware” (an agency to target sectors, accumulate knowledge, coordinate policies) and the institutional “software” (operational features).

### Institutional software: the 4A model
- Proposes a 4A model describing the agency’s required features:
  - Ambition-Agency: set goals to spur internationally competitive and innovative domestic firms in sophisticated sectors and have the ability to implement policies to attain them.
  - Autonomy: run operations in accordance with the mandate, including autonomy from political interference; secure financial and human resources and convening power to coordinate stakeholders.
  - Accountability: present along three dimensions:
    - responsibility to the executive branch in fulfilling the mandate;
    - internal control systems ensuring transparency, efficiency, and adherence to goals;
    - holding firms accountable for support received (progress checks, ensuring competition, corrective actions such as restructuring firms or redirecting support).
  - Adaptability: ability to adapt to changing political, economic, and technological conditions via continuous feedback and to adjust focus, tools, and internal structure.

### Stylized theory and core assumptions (institutional “hardware”)
- Proposes a stylized theory of institutions for growth with a “leading agency” at its core.
- Central assumptions preserved verbatim:
  - Assumption 1. Non-monolithic state: The state is not made up of a single unitary structure, and state policy actions are scattered among many agencies and ministries, which are endowed with their own specific mandates and objectives.
  - Assumption 2. Sectoral structure of the economy: The economy consists of different sectors, existing and potential. Each sector has its own set of requirements needed to develop, including tackling sector-specific market failures and providing sector-specific public (and quasi-public) goods and services. The sectors differ in terms of their scale, productivity, technological, learning, and spillover potential. We describe the sectors that are superior along these dimensions as “sophisticated.”
  - Assumption 3. Sector-specific requirements and industrial policy: The performance of a sector depends on the extent to which policies implemented fulfill the sectoral requirements (as defined in Assumption 2). The state needs to tackle not only “government failures” (public goods, regulations, education, etc.), which broadly translate into horizontal or general policies, but more important, a myriad of sector-specific “government and market failures,” necessitating vertical or sector-specific interventions.
  - Assumption 4. Policy design and sector-specific knowledge: Uncovering sector-specific requirements and the associated industrial policies requires learning to acquire a set of specialized knowledge. The full package of industrial policy actions are a priori unknown and shifts over time, and uncovering them requires learning and continuous accumulation of knowledge, which we describe as metis, that is, a context-specific, dynamically accumulated, and mostly tacit knowledge stock that can only be acquired through experimentation, feedback from the private sector and other state agencies, and action.
  - Assumption 5. Power structure: The state of political economy is important for policy implementation. The required policy actions for the performance of a sector can interfere with the objectives and actions of other state or private sector actors, within the public sector (e.g., turf battles, nepotism) and outside of it (e.g., corruption, rent seeking). Different power structures produce different institutional structures and economic outcomes.

### Sector targeting and coordination
- Distinguishes horizontal (cross-cutting/general-purpose) vs. industrial (sector-specific/vertical) approaches:
  - Horizontal approach: many agencies focus on general-purpose policies (e.g., primary education, transport infrastructure) without sector targeting; tends to support non-sophisticated sectors.
  - Industrial policy approach: sector targeting and directing resources to alleviate sector-specific constraints (e.g., wet labs for biotech, technician training for electronics).
- Highlights necessity of simultaneous, coordinated investments across agencies for sophisticated sectors (specialized infrastructure, specialized skills, regulation, finance, trade agreements).
- Coordination cost insight:
  - With n agents, social cost of communication without a leading agency is proportional to n×(n-1); with a leading agency it is proportional to n — cost is lower by the order of magnitude of n.
- Presents governance design implications:
  - Low coordination costs: decentralized approach with a high-level council may suffice.
  - High coordination costs or political uncertainty: centralized approach with a leading agency is preferable.
  - Hybrid options: high-level council plus a leading agency holding select prerogatives (finance, trade, R&D) depending on context.

### A Leading Agency as the house of knowledge (“metis”)
- Argues a leading agency is necessary to accumulate sector- and context-specific tacit knowledge K_i (metis) required to identify and implement effective policy actions x_i.
- Knowledge features:
  - K_i combines information, institutional capacity, and capabilities of agents; requires continuous experimentation and feedback from private sector and other agencies.
  - Many policy actions and market failures are a priori unknown and shifting; top-down decrees without metis are unlikely to succeed.
- Organizational implications:
  - Leading agency should house sectoral divisions to build K_i(S) for sophisticated sectors and horizontal departments to manage tradeoffs and macro-sustainability (fiscal, inflation, financial stability).
  - Leading agency should be tool-agnostic: free to analyze, design, or create policy tools beyond the confines of any single ministry’s traditional toolkit.
- Committees and secretariats are an inferior alternative because they borrow resources, have limited lifespan, lack continuity and sustained staff needed to accumulate metis.

### Political economy of design choices
- Two institutional design margins influenced by power structure and political stability:
  - Degree of centralization: highly centralized states may rely on a council plus agency under highest authorities; decentralized states require a leading agency with broader prerogatives.
  - Political stability and cycles:
    - Stable or long-lasting executives: leading agency ideally placed close to the executive to ensure shielding and continuity.
    - Frequent political cycles: leading agency should be detached from the executive to preserve continuity and non-political nature (analogy with central banks, NASA, NIH).
- Coalition argument: where de facto independence is difficult, a broad coalition in support of the industrial policy mandate is needed to provide continuity.

### Evidence and lessons from the Asian Miracles
- Observes that Japan, Korea, Taiwan Province of China, Singapore, and Hong Kong SAR set up leading agencies that combined sectoral departments (to accumulate metis) and cross-sectoral departments (to manage tradeoffs and priorities).
- Commonalities across these leading agencies:
  - Long-term, economy-wide mandates oriented toward structural transformation and technological upgrading.
  - Capability to experiment, iterate, and adapt policies based on continuous feedback from the private sector.
  - Organizational forms varied with political contexts but shared the need for autonomy, accountability, and adaptability.
- Summarized institutional examples (years retained exactly as in source):
  - Japan: Ministry of International Trade and Industry (MITI); golden age spanning the period from the 1950s to the 1980s; evolved from protection to export promotion and competition.
  - Korea: Economic Planning Board (EPB); golden age from the 1960s to the 1990s; used five-year plans and linked support to export performance.
  - Taiwan Province of China: Council for Economic Planning and Development (CEPD); golden age from the 1950s to the 1990s; emphasized semiconductors and electronics.
  - Singapore: Economic Development Board (EDB); golden age from the 1960s to the 1990s; shifted from labor-intensive to high-tech and capital-intensive sectors.
  - Hong Kong SAR: Industrial and Technology Development Council (ITDC); golden age from the 1970s to the 1990s; facilitative interventions while often labeled laissez-faire.
- Korea’s five-year planning chronology presented as in source (table preserved as bullet items with exact years and descriptors):
  - First Five-Year Plan — 1962 – 1966 — Creating a self-sustained and export-led economy through technology investment, education, and shift from agriculture to manufacturing — Park Chung Hee
  - Second Five-Year Plan — 1967 – 1971 — Creating a modern economic structure through building major highways and supporting steel and petrochemical industries — Park Chung Hee
  - Third Five-Year Plan — 1972 – 1976 — Heavy Industry Drive especially in five “strategic” fields: (1) electronics, (2) shipbuilding, (3) machinery, (4) petrochemicals and (5) non-ferrous metals — Park Chung Hee
  - Fourth Five-Year Plan — 1977 – 1981 — Continuation of Heavy Industry Drive — Park Chung Hee; Choi Kyu Hah; Chun Doo Hwan
  - Fifth Five-Year Plan — 1982 – 1986 — Shift from heavy industries to technology-driven products — Chun Doo Hwan
  - Sixth Five-Year Plan — 1987 – 1991 — Aiding structural transformation through acceleration of import liberalization and phasing out direct subsidies to industries — Chun Doo Hwan
  - Seventh Five-Year Plan — 1991 – 1996 — Development of high-tech industries in seven provincial cities to aid geographic distribution of industries throughout Korea — Chun Doo Hwan; Kim Young Sam
  - Note preserved verbatim: “The Seventh Five-Year Plan was scrapped in 1993 after the election of Kim Young Sam with a new economic plan that matched his term length. After the election of Kim Dae-Jung, the practice of setting five-year plans was scrapped.”

### Key implications and policy recommendations (distilled)
- Institutional hardware recommendation:
  - Create a leading agency (or tightly knit network of a small number of organizations) at the center of a distributed state apparatus to target sectors, accumulate metis, and coordinate policy actions across ministries, agencies, and the private sector.
  - Organize the leading agency around sector-specific departments and cross-sectoral departments to both build K_i(S) and manage macro- and cross-sectoral tradeoffs.
- Institutional software recommendation:
  - Ensure the leading agency embodies the 4As: Ambition-Agency, Autonomy, Accountability, Adaptability.
  - Provide long-term, economy-wide mandates to reduce capture risk and enable focus on structural transformation rather than short-term expediencies.
  - Design autonomy mechanisms akin to central bank independence (personnel management, financial resources, policy formulation powers) adapted to the political economy context.
  - Build accountability systems along the three dimensions: executive responsibility, internal controls, and conditionality and monitoring of firm-level support.
  - Institutionalize continuous experimentation, feedback loops, and embeddedness with the private sector to accumulate metis.
- Design to context:
  - Adapt the leading agency’s proximity to the executive, prerogatives, and governance form to the degree of state centralization and political stability (centralized, hybrid, or decentralized arrangements).
  - Where de facto independence is hard to achieve, pursue broad coalitions supporting the industrial policy mandate.
- Tool-agnostic approach:
  - Let the leading agency be tool-agnostic: it should analyze and deploy a wide array of instruments (including non-traditional ones like legislation changes) as required by sector-specific K_i; do not predefine the toolkit.
- Coordination and cost efficiency:
  - Centralize knowledge accumulation to reduce communication and coordination costs from proportional to n×(n-1) to proportional to n.
  - Favor sustained institutional capacity (long-term personnel, technical capabilities) over ad hoc committees or short-lived secretariats.

*Source: IMF Working Paper — Introduction (content unit: wpiea2026063-source-pdf - Introduction).*

### 30.6 percent to 18.9 percent while the share of electrical machinery and appliances, a capital- and technology-

### wpiea2026063-source-pdf - 30.6 percent to 18.9 percent while the share of electrical machinery and appliances, a capital- and technology-

### Structural transformation and market-shaping
- East Asian economies moved from light manufacturing to heavy manufacturing to high-tech industries and highly skilled services (e.g., electronics and finance).
- Example sector shares highlighted: 30.6 percent to 18.9 percent (unspecified sector decline) while electrical machinery and appliances increased from 15.8 percent to 21.8 percent.
- Leading agencies had implicit mandates to create new markets and push the technological frontier, consistent with the Mazzucato and Macfarlane (2018) model of structural change across multiple sectors.

### Internal organizational structure of leading agencies
- Japan’s MITI combined vertical (sector-specific) and horizontal (inter-sectoral) divisions (e.g., Machinery and Information Industries Bureau; International Trade Policy Bureau) to evaluate interests across industries and ensure no unit always dominated policy setting.
- Korea’s EPB sat at the top of the Ministry of Commerce and Industry hierarchy and coordinated via an Industrial Policy Bureau, Social Development Bureau, and the Planning and Coordination Office within a network of agencies.
- Taiwan Province of China’s CEPD organized sector-specific divisions within its Department for Sectoral Planning; structure inspired by MITI but less elaborate in cross-sectoral coordination.
- Singapore’s EDB used vertical Cluster Development Division and horizontal Enterprise Ecosystem and Planning Division to aggregate sectoral and economy-wide considerations.
- Hong Kong SAR’s ITDC functioned as a high-level council within a network of committees (Technology Review Board, Technology Committee, industry-specific committees). ITDC was chaired by the Financial Secretary and included ten representatives (five government, five nongovernmental) to leverage market information and convening power.

### Political economy challenges and agency positioning
- MITI competed with the Ministry of Finance and Bank of Japan; nonetheless, MITI controlled foreign exchange, import licenses, and influenced credit via “administrative guidance.”
- MITI’s real power derived from career technocrats, consensus within the Liberal Democratic Party, and revolving-door relationships (amakudari).
- EPB in Korea was directly attached to the President’s office, chaired monthly briefings to the President, and chaired inter-ministerial policy conferences (Economic Ministers Conference, Economic Vice-Ministers Conference, Industrial Policy Deliberation Council), giving it agenda-setting power and control over economic budget consultations.
- CEPD in Taiwan Province of China was part of the Executive Yuan; its head usually outranked the Minister of Economic Affairs and chaired economic meetings.
- Singapore’s EDB was a statutory body under the Ministry of Trade and Industry but maintained extremely close ties to top leadership; its relationship with other agencies (including A*STAR) was cooperative rather than competitive.
- ITDC in Hong Kong SAR governed through a council model with strong industry representation and staff recruited from academia, banking, and private industry.

### The 4As model of institutional features for effective action
- Core framework: Ambition-Agency; Autonomy; Accountability; Adaptability.
- Rationale: Operational “software” needed on top of institutional “hardware” to avoid isomorphic mimicry and to enable effective industrial policy.

Ambition-Agency
- Assess ambition across three dimensions: (i) sophistication of targeted sectors (R&D intensity proxy), (ii) domestic firm involvement in ownership/management/innovation, (iii) international competitiveness/export discipline.
- Risks of low-sophistication focus: eventual slowdown, higher volatility in revenues, vulnerability to terms-of-trade deterioration (Prebisch and Singer arguments).
- Examples and targets:
  - Taiwan Province of China entered semiconductors in the 1970s despite limited domestic demand.
  - Korea’s Third Five-Year Plan (1972-1976) initiated Heavy Chemical Industrialization (HCI).
  - Japan’s First and Second Rationalization Plans for Iron and Steel (1951–1956 and 1957–1961).
- Specific numbers highlighted:
  - Hong Kong Applied Research Fund in 1993 provided up to $750 million.
  - Korea target to increase research investment ratio from 2.4 percent of GNP to 3 percent between 1987 and 1991 (Sixth Five-Year Economic and Social Development Plan).

Autonomy
- Three key autonomies paralleling central bank independence: personnel independence; financial independence; policy independence.
- Legal and operational examples:
  - MITI established under the 1949 act with control over foreign exchange and credit; in 1991 MITI budget ~one trillion yen vs. government budget >70 trillion yen.
  - Korea’s EPB (created 1961) had overarching authority over planning and budgeting; placed under the President and led by a Deputy-Prime-Minister-level Minister.
  - Singapore’s EDB as a statutory board under the Economic Development Board Act gave operational flexibility.
  - ITRI (Taiwan Province of China) received executive funding without Legislative Yuan approval.
- Personnel and prestige:
  - Elite recruitment: MITI largely from University of Tokyo; Korea’s managerial level at EPB once close to 90 percent from Seoul National University.
  - Career continuity examples: MITI Administrative Vice Minister Kodama Koji served 34 years and out-served 12 Prime Ministers.
- Financial independence strategies:
  - Lean budgets to reduce legislative scrutiny (MITI; EDB).
  - Executive-provided budgets for larger incentive programs (Korea and Taiwan).

Accountability
- Three accountabilities: vertical (to executive), internal (within agency), external (holding firms accountable).
- Vertical accountability:
  - MITI reported to the Prime Minister; EPB reported to the President; EDB to the Ministry of Trade and Industry and reviewed by the prime minister’s office; CEPD to the Executive Yuan; ITDC chaired by the Financial Secretary.
- Internal accountability mechanisms:
  - Meritocratic recruitment and promotion; clear performance metrics; hierarchical monitoring and internal audits.
- External accountability to firms:
  - Conditional support mechanisms: MITI required export/productivity targets from subsidized firms; EPB required export/production targets from chaebols; EDB required job creation and technology transfer from MNCs.
  - Hong Kong schemes emphasized matching grants, project-based funding, milestone reporting, audits, and post-project evaluations.

Adaptability
- Leading agencies adapted to shifting international and domestic conditions via autonomy, holistic mandates, monitoring channels, and evolving structures.
- Examples:
  - Taiwan shifted plans multiple times after the 1973 oil crisis (sixth four-year plan halted in 1975; six-year plan 1976–1981).
  - Singapore shifted from manufacturing focus to finance after the 1985 crisis and China’s Reform and Opening Up.
  - Taiwan’s Hsinchu Science Park (opened 1980) and ITRI’s spin-offs demonstrate adaptive institution-led industry creation.

### Agency traits: access, holism, monitoring, evolving structure
- Agency for Change: leading agencies often held preeminent positions (e.g., EPB head as Deputy Prime Minister-level; CEPD chaired by Premier; MITI often a career stepping stone to prime ministership).
- Agency for Agility: broad, flexible mandates allowed balancing wages, employment, macro-stability and growth—akin to central bank flexible mandates.
- Agency for Metis: formal and informal monitoring channels (PMOs in Korea, MITI technology import office, industry interactions, commissions, and review boards).
- Agency for Dynamism: goals and structures evolved from centralized, target-driven approaches at low development stages to more decentralized innovation-support roles at higher development stages.

### Case study: Taiwan Province of China — building a semiconductor industry
- Context and outcomes:
  - 1960s: about 2,000 science and engineering graduates per year for a population of ~12 million.
  - By late 1980s–1990s Taiwan emerged as a leading semiconductor exporter; example figures:
    - TSMC in 2013 took 50% of international market share.
    - IT industry yearly production value: $100 million in 1981 → $6 billion in 1990 → $34 billion in 1998.
- Institutional actors:
  - CEPD (planning umbrella); ITRI (created 1973) as sectoral technology engine; ERSO acquired by ITRI.
  - STAG (Science and Technology Advisory Group, 1979) composed largely of foreign experts and had de facto veto power on technology policy.
- 4As in practice:
  - Ambition-Agency: medium-term plans prioritized electronics and semiconductors; political alignment following Chiang Ching-Kuo’s leadership; targeted recruitment and overseas student sponsorships to build human capital and Silicon Valley links.
  - Autonomy: ITRI had personnel, financial, and operational flexibility; funding provided via executive channels rather than legislature.
  - Accountability: early centralization of decisions and targets for ITRI; later decentralization as private sector matured; structure of labs and business development units ensured technology commercialization and internal checks.
  - Adaptability: CEPD/ITRI spun off firms (e.g., UMC and TSMC origins in ERSO), shifted institutional roles over time, and maintained close executive access for rapid decisions.

Key numeric and factual highlights from Taiwan case:
- ITRI employed more than 4,000 electronics specialists in the 1980s.
- TSMC market share: 50% (2013).
- IT industry production value path: $100 million (1981), $6 billion (1990), $34 billion (1998).

### Case study: Korea — automotive industry upgrading
- Evolution and scale:
  - 1950s: domestic production limited to low value-added parts.
  - 1980s: car production increased twenty-fold during the 1980s from 50,000 annual production to over 1 million by the end of the decade.
  - Market example: in 1987 overall U.S. car sales decreased by 10 percent while Hyundai’s U.S. sales increased by 56 percent (Hyundai’s second year in the U.S. market).
- Institutional dynamics and 4As application:
  - Ambition-Agency: initial misalignment in the 1970s between EPB (favoring liberalization and competitiveness) and President Park (favoring state-centered protection/subsidies) led to import-substitution focus; post-1979 leadership change realigned goals toward export orientation and domestic technology creation.
  - Policy instruments: preferential loans at negative real interest rates and direct subsidies in earlier phases; later Automotive Industry Rationalization Policy (1982) required exporters to report export targets and tied rewards/penalties to export performance; restrictions on MNC majority stakes supported domestic capability building.
  - Autonomy: EPB’s proximity to the center of power and alignment with the executive provided the agency with operational autonomy to shift policy from import substitution to export promotion.
  - Recruitment and knowledge: EPB recruited from Seoul National University (historically close to 90 percent at managerial levels); firms hired foreign experts and partnered with foreign firms to acquire technology (e.g., Hyundai worked with British Leyland, Italian firms, Mitsubishi).
- Sector outcomes and lessons:
  - Early protection generated learning and capability accumulation but also lower profit rates and dependence on imports and subsidies; transition to export discipline and domestic innovation was critical for competitiveness on global stage.

*Italicized source: IMF Working Paper content as provided.*

### 1980. In terms of personnel independence, the EPB was insulated from external pressures for appointments. It

### wpiea2026063-source-pdf - 1980. In terms of personnel independence, the EPB was insulated from external pressures for appointments. It

### Personnel independence and human capital
- The EPB recruited its staff through a meritocratic system and promoted them based on seniority.
- This system "to some extent, made sure the EPB did not have strong ties with outside special interests."
- A sectoral department dedicated to the automotive sector existed within the Ministry of Commerce and Industry, in the Industrial Development Bureau’s Heavy Industry Division, ensuring the EPB relied on experts accumulating specialized industry knowledge (Amsden 1989, Kim 1997, and Woo 1991).

### Financial independence and policy implementation
- Like ITRI, the EPB did not need to ask the legislature for budget; it was able to keep its budgetary independence.
- The EPB formulated policies and a system of financial incentives for automotive firms to export without needing to seek financial approval.
- The EPB’s strong relationship with the President helped implement policies without systematically requiring the legislature’s approval.

### Accountability: pressures, insulation, and internal hierarchy
- The EPB’s management of the automotive industry attracted political and business pressures.
- Political elites resisted many structural changes needed for a successful automotive export industry; the EPB needed to insulate itself from competing commercial interests.
- The EPB had a strong internal hierarchy (internal accountability) to insulate itself from outside interests but initially had little vertical and horizontal units. Over time, decision-making structures became more complex as the economy did.
- Turf battles:
  - The EPB faced fierce opposition from the Ministry of Finance (MOF) over reforms in the 1980s; MOF feared EPB taking over monetary policy.
  - During the peak boom period in 1977-1987, money supply (M2) grew by more than 35 percent per year.
  - Stabilization policies initiated by the EPB in 1980 reduced the growth rate to 8 percent by 1984 (EPB 1988).
- The EPB often bypassed the minister of finance, instituting credit controls and regulating big banks directly to decrease loans and credit supply—measures that created a more stable monetary environment to encourage automotive exports.
- Business-side tensions:
  - Auto parts manufacturers sought higher local content requirements; assemblers preferred liberal sourcing from global suppliers.
  - The Korean Auto Industries Cooperative Association (KAICA), founded in 1962, was a powerful business voice.
  - The EPB’s centralized decision-making and political standing enabled it to resist business lobbying and remain essentially accountable to the executive for implementing its mandate.
- Notable personal-political connection (footnote 46): Kim Joo-young, the father of Daewoo’s founder Kim Woo-jung, had a historical personal bond with Park Chung-hee, which likely contributed to favorable treatment of Daewoo during Park Chung-hee's presidency.

### Adaptability to international shocks and market opportunities
- The EPB’s privileged bureaucratic position helped it adapt to changing international trade currents in the 1980s: the oil shock and the 1981 Voluntary Restraint Agreement (VRA) between Japan and the U.S.
- The EPB, as a super-ministry within MCI, coordinated Korea’s trade liberalization after the oil shock to support a transition toward an export-oriented automotive industry.
- Internal EPB finding: import substitution policies of the 1970s resulted in high prices and low quality in the domestic market, weakening competitiveness (EPB 1980).
- From 1980 onward, the EPB ended different ministries’ subsidization policies and shifted the state from direct sector- and firm-specific intervention to functional and economy-wide intervention (Lee 2002).
- The EPB directed Korean carmakers to adapt to the 1981 Japanese VRA by concentrating on lower-end sub-compact cars; Hyundai’s Pony succeeded in the American market as a result.
- EPB’s adaptation to develop sub-compact cars contributed to Korea’s eventual success in the auto industry.

### Industrial strategy, competition management, and innovation spillovers
- The EPB pursued a hybrid approach:
  - Halting support and restructuring firms that could not become internationally competitive (most chaebols had automotive subsidiaries but only Hyundai-Kia “survived”),
  - Pushing for export orientation and maximum competition,
  - Limiting the number of domestic competitors if competition for resources jeopardized the whole industry.
- Example: In 1981 the EPB forced Kia out of the passenger car market due to concerns about insufficient market size for three automakers to achieve economies of scale.
- Samsung’s 1989 attempt to enter the market via a joint venture with Chrysler was overruled by the EPB; Samsung was allowed back in 1994 when the industry was more mature.
- R&D and innovation:
  - From 1976 to 1980, total research investment of Korea tripled.
  - The share of private R&D grew from one-fifth in 1976 to one-third in 1980 (MOST 1985).
  - The EPB encouraged automakers to invest in innovation rather than rely solely on government support, creating innovation spillovers to upstream industries.

### Key statistics — Table 2: The Expansion of Korea’s Automotive Industry in the 1980s
- 1981: Export volume (number of automobiles) 26,283; Production volume (number of automobiles) 133,084; Percentage Exported 20
- 1982: Export volume (number of automobiles) 20,284; Production volume (number of automobiles) 162,590; Percentage Exported 12
- 1983: Export volume (number of automobiles) 24,510; Production volume (number of automobiles) 221,019; Percentage Exported 11
- 1984: Export volume (number of automobiles) 52,350; Production volume (number of automobiles) 265,361; Percentage Exported 20
- 1985: Export volume (number of automobiles) 123,110; Production volume (number of automobiles) 378,361; Percentage Exported 33
- 1986: Export volume (number of automobiles) 306,369; Production volume (number of automobiles) 601,546; Percentage Exported 51
- 1987: Export volume (number of automobiles) 546,310; Production volume (number of automobiles) 979,739; Percentage Exported 56
- 1988: Export volume (number of automobiles) 576,134; Production volume (number of automobiles) 1,083,655; Percentage Exported 53
- Note: Data from KAMA (2002).

### Key statistics — Table 3: Composition of R&D Investments in Korea’s Automotive Industry (1976–80)
- 1976: Total R&D Investment (million won) 106,220; Share of Government Investment (compared to private investment) 80%
- 1977: Total R&D Investment (million won) 158,869; Share of Government Investment (compared to private investment) 64%
- 1978: Total R&D Investment (million won) 202,218; Share of Government Investment (compared to private investment) 61%
- 1979: Total R&D Investment (million won) 242,900; Share of Government Investment (compared to private investment) 67%
- 1980: Total R&D Investment (million won) 316,946; Share of Government Investment (compared to private investment) 68%
- Note: Data from Ministry of Science and Technology (MOST), 1985.

### Information channels and monitoring
- Formal channels: EPB representatives in each ministry as Planning and Management Offices (PMOs); EPB’s PMO in the Ministry of Science and Technology reported on ministry compliance with EPB policies (Jung 2011).
- Informal channels: Park Chung-Hee’s strong relationship with chaebol heads and regular meetings with them to hear export performance reports provided additional industry information and feedback.

### Conclusion and institutional lessons (4A model)
- The paper argues effective industrial policy requires a leading agency that accumulates metis (context- and sector-specific knowledge) and coordinates across government and private sector.
- The 4A model (software of institutions):
  - Ambition: clear goals and ability to implement policies,
  - Autonomy: independence in action,
  - Accountability: internal, vertical, and external accountability,
  - Adaptability: ability to adjust to changing economic and political conditions.
- A leading agency should combine sector-specific departments and cross-sectoral ones to provide focused and broad perspectives.
- The EPB example shows agencies can operate under different political systems (centralized/authoritarian close to the executive; or independent in electoral settings).
- Parallel drawn to central banks: many institutional features (mandate, agency, autonomy, accountability, technical expertise) are similar, though central banks have narrower mandates and tools.
- The paper concludes a specialized leading agency for long-run growth is needed to manage industrial policy; the Asian Miracles’ institutional setups provide a replicable architecture to build such agencies.

*IMF Working Papers — Institutions for Industrial Policy (excerpt).*

### References

### wpiea2026063-source-pdf - References

### References overview
- Bibliographic compilation of works cited, including books, journal articles, working papers, staff discussion notes, institutional reports, and online sources.
- Notable recurring topics/authors include: industrial policy, developmental/state capacity, East Asian cases (Korea, Taiwan Province of China, Singapore, Japan, Hong Kong SAR), central bank independence, innovation systems, and public-sector institutions.
- Examples of cited works (exact titles preserved as in source):
  - Acemoglu, D., & J. A. Robinson. 2012. Why nations fail: The origins of power, prosperity, and poverty. Crown Publishers.
  - Cherif, R. & F. Hasanov. 2019a. “The return of the policy that shall not be named: Principles of industrial policy.” International Monetary Fund Working Paper 19/74.
  - OECD. 2025. “An institutional framework for industrial policies.” OECD Science, Technology and Industry Policy Papers, No. 180, OECD Publishing, Paris.
  - Evenett, S., A. Jakubik, F. Martín, & M. Ruta. 2024. The Return of Industrial Policy in Data. IMF Working Paper 24/1.
  - Baquié, S., Y. Huang, F. Jaumotte, J. Kim, R. Machado Parente, & S. Pienknagura. 2025. Industrial Policies: Handle with care. IMF Staff Discussion Notes, 002, International Monetary Fund.

### Thematic emphasis in the references
- Historical and comparative studies of East Asian industrialization and developmental states (e.g., Johnson 1982; Wade 1990; Amsden 1989; Studwell 2013).
- Institutional analysis of planning and coordination agencies (e.g., Choi 1987; Huang 2002; Okimoto 1989).
- Policy design and political economy of industrial policy (e.g., Rodrik 2008; Juhász, Lane, & Rodrik 2024; Andreoni & Chang 2019).
- Innovation, technology transfer, and university-industry links (e.g., Freeman 1995; Saxenian & Hsu 2001; Sharif & Baark 2008).
- Central banking, monetary policy, and institutional credibility (e.g., Cukierman 1992; Buiter 2024; Wray 2014).

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### Appendix. Historical Background of the Leading Agencies — Key takeaways
- General:
  - The appendix provides concise institutional histories for agencies in Korea, Taiwan Province of China, Singapore, Japan, and Hong Kong SAR that played leading roles in industrial policy and economic development.
  - Emphasis is on origins, mandates, organizational design, political context, and key transitions.

- Korea (EPB)
  - EPB (Economic Planning Bureau) was created in 1961.
  - EPB goals: (1) promoting exports to accumulate capital and (2) regulating prices to aid the initial industrialization process (Cheng et al 1998).
  - Park established EPB by merging parts of the Ministry of Construction (Bureau of Planning and Foreign Cooperation), Ministry of Finance (Bureau of Budget) and Ministry of Homeland Affairs (Bureau of Statistics) into a “super-ministry” with controls on planning, foreign relations, budget and statistics research (Choi 1987).
  - Political context: created in the aftermath of the Park Chung Hee military coup; internal need for strong economic growth to support regime legitimacy; external reliance on American foreign aid in 1961.

- Taiwan Province of China (successive planning agencies)
  - Successive agencies created to coordinate long-term economic development through industrialization and rural development.
  - Political challenge: Kuomintang lacked strong links to the domestic island population after 1949; the 227 Incident (massacring thousands in 1947) and geographic urban–rural divides threatened legitimacy.
  - Government created successive planning agencies ad hoc to bypass the bureaucratic system and attract talent through higher pay:
    - CUSA (Council for US Aid): 1948-1963
    - CIECD (Council for International Economic Cooperation): 1963-1973
    - EPC (Economic Planning Council): 1973-1977
    - CEPD (Council for Economic Planning and Development): 1977-2014
  - Purpose: combine economic development with allocative equity to benefit both urban and rural areas.

- Singapore (EDB)
  - EDB (Economic Development Board) was created in 1961 to attract investors following political changes around independence.
  - UN review in 1960 identified unemployment as the biggest challenge and urged attraction of investors (Winsemius 1963).
  - Chronology:
    - 1961: EDB created.
    - 1963: Singapore’s independence from Britain (shortly before).
    - 1965: Singapore’s ejection from Malaysia and emergence as a sovereign city-state.
    - 1961–1965: EDB focused mostly on import-substitution strategies by tapping into the Malaysia market.
    - Post-1965: shift to export-oriented policies after loss of Malaysian market access.
  - EDB role: “one-stop” agency for investors — providing land, building, labor, tax breaks, a sympathetic bureaucracy, and negotiating with government bureaucracies on investors’ behalf (Callon 1995).

- Japan (MITI)
  - MITI (Ministry of International Trade and Industry) was created in 1949.
  - After the postwar Economic Stabilization Board (Keizai Antei Honbu) was abolished in 1952, MITI became the primary agency in charge of economic planning.
  - MITI responsibilities included setting development priorities and implementing policies often through consensus with large corporations rather than direct political executive action (Okimoto 1989).

- Hong Kong SAR (HKPC, ITDC)
  - Pre-WWII role: trading and finance center with little industrial activity (Szczepanik, 1958); described as a “trading and banking entrepot” (Yeh and Ng, 1994).
  - 1951 Korean War and US trade embargo on China (Chen 2006) led entrepreneurs to transition to export-led industrialization.
  - Manufacturing growth:
    - 1961: manufacturing share of GDP about 24 percent.
    - 1970: manufacturing share of GDP increased to 31 percent.
  - Firm structure and statistics:
    - 1988: small and medium firms with less than 50 workers accounted for 44 percent of the total manufacturing workforce and 35 percent of the gross output value (Yeh and Ng, 1994).
  - Transition in the 1990s: manufacturing slowed and tertiary sectors (finance, insurance, real estate) expanded due to rising land and labor costs, rising protectionism, and competition.
  - Government role: traditionally characterized as “positive nonintervention” or laissez faire, but the government employed elements of industrial policy through agencies:
    - HKPC (Hong Kong Productivity Council) established in 1967 to offer training, management consultancies, and technological support; financed by the government and servicing computers, electronics, engineering, chemicals and metallurgy, and textile and apparel.
    - ITDC (Industry and Technology Development Council) created in 1992 to enhance competitiveness via technology transfer and applied research and development.

*IMF Working Papers — Institutions for Industrial Policy (References and Appendix as in source PDF).*

### Appendix Table 1. A Brief Summary of Leading Agencies

### Appendix Table 1. A Brief Summary of Leading Agencies

### Agencies, Year Created, and Reason for Creation
- Korea Economic Planning Bureau (EPB) — 1961  
  - To address internal and external pressures for industrialization faced by the military government after the 1961 coup
- Taiwan Province of China — Various 1948  
  - Kuomintang’s need for economic development to benefit both urban and rural areas
- Singapore Economic Development Board (EDB) — 1961  
  - To facilitate investment for labor-intensive manufacturing sectors to reduce unemployment
- Japan Ministry of International Trade and Industry (MITI) — 1949  
  - To help coordinate government policies for economic reconstruction and development after WWII
- Hong Kong SAR Hong Kong Productivity Council (HKPC) and its successor ITDC — 1967  
  - To increase productivity of local firms

### Main Responsibilities (as listed)
- Korea Economic Planning Bureau (EPB)
  - Promote exports to accumulate capital  
  - Regulate prices to aid industrialization  
  - Control budget  
  - Set economic plans
- Taiwan Province of China
  - Coordinate government policies across ministries  
  - Set economic plans
- Singapore Economic Development Board (EDB)
  - Attract investment  
  - Facilitate joint foreign ventures
- Japan Ministry of International Trade and Industry (MITI)
  - Setting development priorities through consensus with businesses
- Hong Kong SAR Hong Kong Productivity Council (HKPC) and its successor ITDC
  - Provide training programs and management consultancies  
  - Support technology transfers and upgrades

*Institutions for Industrial Policy: The Foundation of Economic Development Working Paper No. WP/   2026/063*

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