At least, that's the opinion of economist and Guardian favourite Ha-Joon Chang:
...[Britain] urgently needs to develop a long-term productive strategy through a broad-based public consultation involving not just the government and private sector firms, but trade unions, educational institutions and research institutes.The government should talk to all these entities and ask them: "do you need more money?" I wonder what they'll say. Anyone want to have a guess? Anyone? Bueller?
The strategy should first carefully identify the industries, and the underlying technologies, that will be the future motor of the economy and then provide them with the necessary support. This could be in the form of subsidies for R&D, loan guarantees for small firms, or preferences in government procurement, and should be targeted at "strategic" industries, although they could also be in the form of policies that are apparently not industry-specific.This sounds very much like a "picking winners" strategy. We remember how well that worked out in the 1970s with the National Enterprise Board who, for instance, sank £200 million into semiconductor specialist Inmos who never made a profit - and this in the middle of the semiconductor revolution. That £200 million in 1980, incidentally, would be about £800 million today.
Ha-Joon Chang may have spent a lot of time researching economics, but it would behoove him to examine a little history to see how well the policies he prescribes have turned out in the past. He's been calling for a selective UK industrial policy since at least 2010. The example he picked in that article is instructive:
For example, the Nokia Group had to sit through 17 years of losses (helped by government procurement programmes) in order to establish its electronics division, which is now the core of its business.Let's look at Nokia's share price over the past 3 years. From about $10/share in November 2010 it's dropped to $3.68 a share today and had 2012 results of a €2.3bn loss. If Ha-Joon can't predict industrial success over 3 years, what makes him think that government can do any better?
Ha-Joon Chang has been teaching Economics at the same university for 23 years. Perhaps the lack of variety and challenge has made him a little stale.