Industrial Policies in a Changing World: What Prospects for Low-Income Countries?

Following the 2008–09 financial and economic crisis and the remarkable success of emerging global powers such as China, notably through heterodox policy choices, there is an emerging consensus among leaders about the relevance of industrial policies as a means to recalibrate economic structures if a country wants to remain competitive or make it to the next level of development. The current debate on industrial policy has mutated. Today, it is less about interventionist policies that countries need to adopt to promote economic nationalism and development. Instead, it is about putting forward ideas about technological innovation to close productivity gaps, industrial upgrading, and economic diversification. The question is thereforenot whether governments should put industrial policies in place, but rather how these policies can be used in a smart way.