Industrial Policy

Industrial Policy is defined as the strategic effort by the state to encourage economic transformation, i.e. the shift from lower to higher productivity activities, between or within sectors. Specifically, industrial policy refers to “any type of selective government intervention or policy that attempts to alter the structure of production in favour of sectors [or activities] that are expected to offer better prospects for economic growth in a way that would not occur in the absence of such intervention in the market equilibrium” (Pack and Saggi, 2006).

This page brings together Industrial Policy debates, guidance, and country experience. Key take-aways include:

• There is an ongoing debate over which sectors, if any, 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.