Is industrial policy relevant in the 21st century?

Abstract EN

This paper is concerned with the issue of whether "industrial policy" remains appropriate to bring about development in the 21st century.

Among other things ; the paper reviewed the various approaches to the formulation of industrial policies ; indicated the contradictions, and double standards, in the laws of the WTO and GATT, and highlighted the lack of theory underlying trade liberalization.

In view of its review of the evidence the paper proposed a general framework for the formulation of trade and industrial policies appropriate to country circumstances.

It is suggested that industrial policies must be selective and predictable, and that they pay attention to the role of supplementing the non-price factors in the development of the agricultural sector ; and noted that the aim of trade policy, as a component of industrial policy, should be to improve productivity rather than relying on the successive devaluation of the exchange rate, the selective use of foreign direct investment and the effective management of capital flows.