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. It refers to “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” (Pack and Saggi, 2006) .

At a glance: Short reads on Industrial Policy

Synthesis Note: Industrial Policy, DCED, 2017. This note summarises current key issues and debates in Industrial Policy. Key take-aways include:

  • 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.

DCED publications

Background documents: structural transformation

For and against Industrial Policy in developing countries

“How to” of Industrial PolicyIndustrial 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