Currency undervaluation is superior to selective industrial policy because it subsidizes all tradable industries across the board (a 10% undervaluation subsidizes them all by 10%) without requiring the government to pick winners, and because micro-level industrial policies cannot undo a 20% currency overvaluation caused by capital inflows.

causalpending

Speaker

Dani Rodrik

Evidence Quote

the beauty of the exchange rate under valuation is that it's across the board you don't have to pick

Source

Dani Rodrik on Globalization, Development, and Employment 04/11/2011EconTalk
Created: 6/16/2026, 2:24:26 PM

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