Integrated Industrial Policy

Living reference work entry
Part of the Sustainable Development book series (SD)

Abstract

The relation between macroeconomic analysis and industrial economics is often strained and separate, and this has translated into a disconnection at the level of policy discussions and implementation. This chapter argues that, to be effective and sustainable, industrial policy must be embedded in an integrated framework that is coherent with other policies relating to trade, competition, the financial sector, fiscal structures, labor markets, and the macroeconomy. At the least, there must be no contradiction between them. Even in the most promising scenario (where well-informed policies are supported by “reciprocal control” mechanisms that ensure support is provisional on performance; where learning and linkages act to strengthen productive capacities and extend the technological and knowledge barrier; and where political trade-offs and economic or social rents are properly dealt with), industrial policy cannot produce the desired results if other policies push and pull the economy in directions that go against the broader vision of structural transformation, sustainable development, and catching-up.

Such an integrated approach is especially needed in today’s economic climate, with low aggregate demand, stagnating trade, falling fiscal revenues, unpredictable currency and capital markets, and a continued reluctance on the part of business to invest. This chapter describes some of the main areas where policy makers need to pay attention, including the linkages between industrial policy and policies with respect to international trade, global value chains, the services sector, developmental procurement, investment and profits, tax and fiscal policies, and incomes policies and aggregate demand, among other aspects of the sustaining macroeconomic environment that needs to be hand in hand with industrial policy.

Keywords

Industrial policy and macroeconomics Industrial policy and trade Developmental procurement policy Global value chains Finance Sovereign wealth funds 

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Copyright information

© Springer Nature Singapore Pte Ltd. 2017

Authors and Affiliations

  1. 1.United Nations Conference on Trade and DevelopmentGenevaSwitzerland

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