Industrial policies in the era of globalisation and financialisation

Globalisation, and its impact on production, has an extensive, well-established discourse. Research on financialisation is also burgeoning although little attention has been given to the impact on the structure of production within national economies. Industrial policy discussion has returned to the centre stage. The aims of this workshop are:
a) To progress an understanding of the restructuring of production over the last three decades from the concurrent global influences of financialisation and globalisation
b) To identify the challenges posed by these global processes for national industrial policies.

Finance has long played a central role in the economy rendering goods or services into an exchangeable form and thus, facilitating trade. Since the 1970s or so, finance has moved beyond this traditional role. Much has been written about the observed realignment of capitalism towards financial markets, the emergence of ‘money manager capitalism’ and the rise of the ‘global financial system’. Discussion of the nature and dynamics of contemporary capitalism has been increasingly framed around the term ‘financialisation’ to describe how finance has come to dominate the operation of the real economy and permeate almost every sphere of social and cultural activity (Christopherson et.al. 2013). A number of research areas have emerged about the phenomenon of financialisation. While these studies have revealed the relationships between finance, profit and production, research about financialisation has fallen short of providing a systemic explanation of the structural transformation of national economies over recent decades (Lapavitsas 2011). Empirical analyses, with few exceptions, have not specifically considered how production has been restructured in response to the primacy of profit and financial imperatives. The complexity of the structural transformation of production has been precluded by the analytical level adopted by past studies. Financialisation studies have been skewed towards analysing national accounts to illuminate the changed macro savings-investment relationship brought about, in part, by changes in investment decisions of non-financial firms as a result of new financial imperatives (e.g. Orhangazi 2008). Industrial organisation studies, within the globalisation discourse, have focussed heavily on the rapid growth and increasing consolidation of transnational corporations, and the vertical de-integration and fragmentation of production globally with the rise of commodity supply chains (e.g. Millberg & Winkler 2013). To fully understand the implications of financialisation and globalisation on the organisation of production, and thus for national industrial policies, empirical analysis needs to be extended to the level of sectors and the production of specific commodities within those sectors. Sectors form a national economy’s industrial structure. Industrial policy has been a key means to promote national economic growth and development through influencing the industrial structure and performance of firms and industries. By industrial policy, we mean measures selected by national governments to alter the composition of an industry’s output and employment, and to improve the economic performance of firms within that industry. Industrial policy thus works at the level of an industry and a firm. For developing economies, industrial policies have driven export development and import replacement strategies (Wade 2003). The debate about industrial policy has been, however, marked particularly by acute differences about the concept and the merits of government intervention to promote and/or fast-track the process of structural change (Chang 2003). Major rethinking about industrial policy, and particularly the role of markets and government to shape the economic structure, has occurred as de-industrialisation has accelerated in the more advanced industrial economies, and even more so since the 2008-09 financial crisis and the ensuing economic crisis with persistently high unemployment (Stiglitz et.al. 2013). Industrial policy has marked recent Australian political debate with the announced closure of all three motor vehicle manufacturers and Victorian aluminium smelting, the national airline Qantas lobbying for government support and the Victorian Government investment in a regional food processor following the Commonwealth Government’s decision not to assist. In October 2014, the Commonwealth Government announced a ‘competitiveness agenda’ targeting five industrial sectors. In sum, global phenomena have transformed the organisation of production in sectors of a national economy. We have little understanding of the actual nature of the impact and consequences on sectoral production exerted by the most recent phenomenon, financialisation. This has significant implications for the need and efficacy of industrial policies for both developed and developing economies. This is the analytical puzzle that the workshop will address through the following questions:
What is the relationship of the processess of financialisation and globalisation to the contemporary industrial structure? Are there sector or commodity specificities, similarities and differences in the way that these global processes manifest and reorganise production? 
What are the dominant forms, processes, techniques and policies which have embedded these global processes within national industrial sectors or the production of commodities?
How can national industrial policies address the nature and form of these impacts?
Which industrial policy instruments will be the most effective in the era of financialisation and globalisation?
Do the issues for framing national industrial policies within the contemporary era differ between developed and developing countries?

This workshop brings together academics from multiple disciplines, policymakers, independent researchers and trade unions to inform public policy debates and establish directions for future research. The workshop will also extend the discourse which Chester, Toner and Newman have initiated through the organisation of panels at international conferences in 2013 and 2014 on the implications of the restructuring of production in the contemporary era.

References:
Chang, H-J. (2003), Globalisation, Economic Development and the Role of the State, London: Zed Books. Christopherson, S., Martin, R. & Pollard, J. (2013), ‘Financialisation: Roots and repercussions’, Cambridge Journal of Regions, Economy and Society, 6(3): 351-57.
Lapavitsas, C. (2011), ‘Theorizing financialization’, Work, Employment and Society, 25(4): 611-626.
Milberg, W. & Winkler, D. (2013), Outsourcing Economics: Global Value Chains in Capitalist Development, Cambridge: Cambridge University Press.
Orhangazi, Ö. (2008), ‘Financialisation and capital accumulation in the non-financial sector: A theoretical and empirical investigation of the US economy: 1973-2003’, Cambridge Journal of Economics, 32(6): 863-86.
Stiglitz, J.E., Lin, J.Y. & Monga, C. (2013), ‘The rejuvenation of industrial policy’, World Bank Policy Research Paper 6628.
Wade, R. (2003), Governing the Market: Economic Theory and the Role of Government in East Asia’s Industrialization, Princeton, N.J.: Princeton University Press.