The role of public policy in the transition of the industry. A view from Mexico and Korea

Publication Type:

Conference Paper


Gerpisa colloquium, Paris (2019)


In Covarrubias and Ramírez´ (editors) forthcoming book is stated that while the automobile industry´s axes of change and power are moving geographically and functionally, public policies for innovation are now exerting a greater influence on the course of its current transition to a new paradigm. The idea of a growing role of public policies in this transformation is not new. Frayssenet (2009) reflected on this possibility as well as Jullien and Pardi (2013) as they assessed –what they termed-- the restructuring of old and the structuring of new industries. The prominence of government policy also grows with the advance of protectionist policies and a conservative approach to energy and the environment, as represented by the Trump administration and Brexit.
These two are polar possibilities. In the first case, the state acts as an entrepreneurial agent taking on the role of “innovator-investor of first resort” (Mazzucato, 2013) to guide the transition of the industry. In the second case, the state acts as conservative agent meant to defend its national frontiers, save its emblematic symbols –for instance, through injecting historic level of resources to its OEMs--, and extend the life span of the ICEs-Oil industrial paradigm. But there are many more state´s roles. Contrasting State´s priorities are evident in policies focusing on dominating the emergent paradigm of AVs-EVs, vs. attracting investment and employment with low salaries, vs those that bet on a new industry of sustainable mobility and integrated transportation services to get rid of their external oil dependency, etc.
Hence, it is critical to better study the role that governments are playing within their national contexts in the transition of the industry along with their strategic interactions with incumbents and newcomers and other stakeholders. In the same vein, cross national comparative studies of state policies for the industry can broad our understanding of the influence of national-based legacies on the above evolutions.
This paper looks at the Korea and Mexico cases under the premise that they reflect polar opposites in both the evolution of the auto industry and the public policies their governments have played to back it. In their more basic foundations, Korea represents a story of a government decided to build its own national auto industry and compete globally whereas Mexico represents a case of state policy´s reliance on FDI flows to develop its industry and take the place of reliable-cheap export platform. While both are known as cases of industrial history casting out seemingly different outcomes, there are no studies that confront their pubic policies in the automotive sector along their uneven industrial trajectories. This paper will contribute to fill this gap trough comparing the way state policies have pursued the goal of catching up in the auto industry and influencing on the change of its paradigm. To this end, the paper draws on Keun and Malerba´s (2017) catch-up cycle to trace Korea and Mexico´s state policies in the three windows of opportunity that determine that cycle, namely institutional, knowledge and technology, and demand changes.

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