Doomed to Choose: Industrial Policy as Predicament

This article argues that Industrial Policy is essential for advancing any development strategy. Stakeholders from the public and the private sectors should be involved.

Industrial policy is a key issue in any development strategy aiming to enhance economic activity.

The paper argues that since economic development is based both on capabilities provided by the public sector and by the private sector, there is a need to promote industrial policies that tackle these two realms in an environment of extensive cooperation.

In particular, these policies are especially challenging when countries go through structural transformation as part of the development process, as they need to not only increase output per worker but also to close unprofitable industries.

The paper calls for a governance architecture approach that allows stakeholders to self organize and that achieves discipline through transparency. Moreover, it calls for an approach that is experimental and open minded with built-in checks and balances.

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