Industrial policy in the twenty-first century: competing perspectives

Industrial policy has in the wake of the global financial crisis made a surprising revival in research and policy debate on economic transformation. The paper starts by defining industrial policy and presenting different types of industrial policy. It moves beyond the classical industrial policy discussion and prioritises the debate around the new/strategic industrial policy. Then, the paper discusses the main rationales for industrial policy and discusses whether there exists an optimal policy. Subsequently, the paper looks at the role of the institutional framework for industrial policy. It is suggested that effective implementation rests upon the institutional capacity rather than design. Next, the origin of appropriate industrial policies and the wider "politics of industrial policy" is dealt with just as the "policy space" issue is taken up. Finally, industrial policy in the 21st century is discussed in relation to two issues - global/regional value chains and greening of industrial policy.