Constructing New Institutions of Development

Lessons from Bank Restructuring in Poland  and the Mendoza  Wine Cluster in Argentina

November 15, 2005

Presenter: Gerald A. McDermott, Assistant Professor of Management, the Wharton School, University of Pennsylvania.

The session was chaired by Jean-Eric Aubert, Knowledge for Development Program. Kristian Thorn (Human Development, LAC Region) and Yevgeny Kuznetsov (Knowledge for Development Program) were discussants.  

Overview

Scholars and policymakers are increasingly attempting to formulate a "new industrial policy" whereby the state attempts to solicit vital information from market and social actors while empowering them to restructure sectors and jointly construct new institutions. To reveal key principles of new industrial policy, this talk juxtaposed two cases - bank reforms in Poland and the creation of innovative capacities for the Mendozan wine sector in Argentina.  In both cases, the key was to stimulate public-private learning - be it for financial restructuring and regulation or knowledge diffusion and upgrading.

Two policy principles were discussed in detail: (1) empowerment of a variety of relevant public and private actors to engage in restructuring and policymaking; and (2) the use of rules that force the participants to share private information and collectively evaluate periodically their own actions and the remedies/policies of the nascent institution they occupy.

This talk was part of a series of seminars on New Industrial and Innovation Policy (a set of interventions which is distinct from the ‘old’ functional/ horizontal industrial policy of the 1980s and 1990s, yet capable of avoiding familiar old pitfalls of ‘picking winners’) initiated by a seminar on case studies of new industrial policy held on June 13, 2005.

Resources

It’s Not What You Do, but Often How You Do It: the Politics of Institutional Renovation and Upgrading.  (PDF, 1.16Mb)

Politics, Power, and Institution Building: Bank Crises and Supervision in East Central Europe. (PDF, 191Kb)

The Politics of Institutional Renovation and Competitive Upgrading: Lessons from the Transformation of the Argentine Wine Industry. (PDF, 585Kb)