Productive transformation requires seizing the opportunities available and opening new ones in a competitive world. Rethinking Productive Development examines the market failures impeding transformation and the government failures that may make the policy remedies worse than the market illness. To address market failures, the authors propose a simple conceptual framework based on the scope and nature of the policy approach. They then systematically analyze country policies through this lens in key areas such as innovation, new firms, financing, human capital, and internationalization to show the power of this way of thinking. Still, the book warns that policymakers cannot be sure what the right policy interventions are and must set up a process to discover them that calls for public-private collaboration. Recognizing that the risk of capture needs to be checked and that even the best policies will fail without the technical, organizational, and political capacity to implement them, thebook concludes with ideas on how to design institutions fostering the right incentives and how to grow public sector capabilities over time.

Manuel Agosin Mariana Bassi Juan Blyde Gabriel Casaburi Jorge Cornick Gustavo Crespi Fernando De Olloqui Eduardo Fernández-Arias Alessandro Maffioli Christian Volpe Martincus Ugo Panizza Carlo Pietrobelli Alejandro Rasteletti Graciana Rucci Ernesto Stein Alberto Trejos Sergio Urzua Rodrigo Wagner

PART I: THE ROLE OF PRODUCTIVE DEVELOPMENT POLICIES 1. Rethinking Productive Development 2. A Conceptual Framework for Productive Development Policies PART II: SOUND POLICIES IN KEY AREAS OF APPLICATION 3. Investing in Ideas: Business Innovation Policies 4. The Start-Up and Scale-Up of High-Productivity Firms 5. Beyond the Classroom: Preparing People to Produce 6. Giving Credit to Productivity 7. All Together Now: Cluster-Based Policies 8. A World of Possibilities: Internationalization for Productive Development 9. Selecting Priority Sectors for Productive Transformation: An Elephant in the Room? PART III: INSTITUTIONS FOR SUCCESSFUL POLICIES 10. The Hard Part: Developing Public Sector Capabilities for Successful PDPs 11. Two to Tango: Public-Private Collaboration in Productive Development Policy