Industrial Policy can be defined as “government efforts to alter industrial structure to promote productivity-based growth” (World Bank). Some argue that Industrial Policy is the only approach that delivers real economic growth and transformation: “Development is fundamentally about structural change: it involves producing new goods with new technologies and transferring resources from traditional activities to these new ones” (Dani Rodrik 2007). Similarly, developing countries can never emerge from aid dependency “if they are unable to use the industrial policies (which) they will need to transform their domestic industries, diversify their economies and build up their own tax bases over time” (Rick Rowden, 2011).
But others argue that it has rarely worked, because it can be captured by vested interests, or because it is not possible for civil servants to ‘pick winners’. The evidence used to support both arguments may be based on the same examples, yet interpreted or framed in different ways; India’s car industry and Bangladesh’s garment industry are used to show both that liberalisation ‘works’, and that industrial policy ‘works’ (Khan 2014).
Clearly more research and clarity are needed to resolve these debates; meanwhile, this page offers you a synthesis of six key issues of relevance for anyone interested in industrial policy as well as a range of resources on the theme.