Industrial policy

Introduction

Industrial Policy

Industrial policy is defined as the strategic effort by the state to encourage the development and growth of a sector of the economy. UNCTAD defines industrial policy as a “concerted, focused, conscious effort on the part of government to encourage and promote a specific industry or sector with an array of policy tools”. Pack and Saggi (2006) provide a more detailed definition: “any type of selective intervention or government policy that attempts to alter the structure of production toward sectors that are expected to offer better prospects for economic growth than would occur in the absence of such intervention, i.e., in the market equilibrium.” This page explores five key issues and debates within industrial policy.

 

 

DCED Industrial Policy synthesis note

Click here for a summary of current key issues and debates in Industrial Policy (2017). Key takeaways:

  • Some argue that Industrial Policy is the only one to deliver real growth; others that it has almost never worked. Sometimes, the same evidence is cited in support of both arguments.
  • There is an ongoing debate over which, if any, sectors Industrial Policy should target. Not all industries are equally useful for development, some can be good for mass employment, but allow little technological learning.
  • Industrial Policy is a relatively demanding approach. To be effective, its design and implementation needs to take into account both a government’s capabilities and political will.

 

Background documents: structural transformation

‘Big picture’ documents on development pathways

Research on growth and structural transformation in Asia

Research on growth and structural transformation in Africa

 

For and against Industrial Policy in developing countries

 

“How to” of Industrial Policy

 

Industrial Policy experience from various countries

Photo credits

Photo credits: Florence Nand of MDF, Rob Rickman of Rampant Fiji Limited/Tran Viet Duc, Bronwyn Cruden, Global Affairs Canada