A country's industrial policy aims at promoting the development of sectors that often relate to manufacturing and is especially important for less-developed countries as they seek to catch up economically. Industrial Development and Division of Labor re-examines the long history behind the debate on its formulation and organises the discussion around the two types of division of labour found in Adam Smith's Wealth of Nations. One type has evolved to become the neoclassical perspective and its notion of market failure that has heavily skewed the debate's history. Noting its limitations, including the simplified catch-up learning that is conceived, this book illustrates that arguments for industrial policy that are rejected by Neoclassical economists – so-called 'protectionist' and import-substituting ones – and newer notions involving innovation systems actually share roots with Smith's other type of labour division. They offer broader perspectives on policy that call for establishing elaborate interactive contexts for learning for development.

‘This work gives a broad historical overview of how economists have analyzed industrial development and derived conclusions regarding the role of industrial policy. Using Adam Smith's analysis of the division of labor as its starting point, the work covers both mainstream and heterodox perspectives. Given the recent renaissance of industrial, trade and innovation policy, the work is timely, making it possible to refer current debates to the history of economic thought.'

Bengt Åke Bertil Lundvall - Emeritus Professor at Aalborg University, Denmark

‘Peter Ho's very original and insightful heterodox intellectual history of industrial development builds on his original reading of Adam Smith's largely ignored understanding of the division of labor in manufacturing operations and processes. In his largely sequential account of key ideas in postwar economic development analysis, he explains the rise, limitations and fall of earlier fads and orthodoxies. With the recent embrace of once-forbidden industrial policies by both Biden and Trump administrations in Washington, this book almost anticipates their eventual critique.'

Jomo Kwame Sundaram - Emeritus Professor University of Malaya, former United Nations Assistant Secretary-General for Economic Development