UNCTAD15 pre-event: Reclaiming industrial policy for development – putting policymaking theory into practice

Virtually all of today’s advanced economies have completed their journey from widespread rural poverty to post-industrial wealth employing policies designed to shift the production structure towards higher productivity activities and sectors with progressively, better paid jobs and a greater upgrading potential. Such policies are conventionally called industrial policies.

From the late 1970s onwards, the debates between proponents and opponents of industrial policy became sharply ideological. In mainstream economic analysis, in the pronouncements of international development agencies, and in explicit policy statements by some (especially Anglo-Saxon) governments, industrial policy, along with its main architect, the state and its role in structural transformation fell in to disrepute, although it often continued in practice through more ad hoc responses to specific economic challenges. Growth theorists worked from standard production functions that assumed no special properties for any particular sector, or any particular role for any actor, such as the state, while others pointed to the potential for industrial policy to create ‘rent-seeking’ opportunities. In mainstream economies state has been deemed as a platform to seek economic rents. 

However, failures of most developing countries to industrialize under neoliberal policies and market governed economies has contrasted with the successes of many East Asian countries who pursued well planned policies to industrialize with strong developmental states. Hence, whether in the context of meeting the SDGs, tackling the climate emergency, rewiring supply chains in response to the Covid-19 crisis or leveraging new digital technologies, industrial policy has returned to centre stage of debates over the direction of development strategy at the national level. International organizations have become more open to discussing industrial policy in developing countries, in part thanks to China’s remarkable transformation over the last forty years, but also, as UNIDO has insisted, in the context of a climate emergency that requires a rapid shift from high- to low-carbon growth paths in both developed and developing countries.

UNCTAD’s World Investment Report 2018 identified eighty-four countries (accounting for 90 per cent of global GDP) that had adopted formal industrial policies in the five years to 2018. A joint UNCTAD-ILO volume concluded “discussion among economists and policy makers is now increasingly shifting away from whether or not to have industrial policy and towards a focus on the objectives and scope of industrial policies and “how to do it” in a way appropriate to each country`s conditions”. This is a new consensus across a broad spectrum of economists and policy makers on the on the relevance, desirability, and practicability of industrial policy.

It is therefore of primary importance supporting developing countries in the formulation and implementation of industrial policy. This is why, in the framework of the OECD Initiative for Policy Dialogue on Global Value Chains (GVCs) Production Transformation and Development, UNCTAD has participated to the development of a policy assessment and guidance tool, the Production Transformation Policy Reviews (PTPRs), which aims at providing a guiding framework to identify options and actionable policy responses to promote structural transformation and upgrading, based on comparative assessment of countries’ assets, upgrading potential and priorities. To the date four PTPRS have been carried out by the OECD, UNCTAD and UNIDO in Latin American and African countries, with the participation of the respective UN-Regional Commissions.

Objectives:

The purpose of this webinar is to discuss how developing countries are concretely taking advantage of the new consensus around industrial policy in their policymaking and examine how the PTPRs has aided beneficiary countries in the effort to update the policy toolset at their disposal. The event will represent the closure of a series of webinars that, tapping into the expertise of the recently launched Oxford Handbook on Industrial Policy, explore some of the challenges and areas of debate around industrial policy making.

The key objectives and expected outcomes of the event are the following:

1. To emphasize what is new in the “new consensus” around industrial policy and to asses and compare the challenges in the design and application of industrial policy in different economic and political circumstances.
    
2. To discuss the experiences of the different countries that went through the policy review exercise to increase knowledge sharing and peer-learning, and create an open dialogue in which member states can learn from different experiences of industrialization including challenges.
    
3. To examine the role that interagency cooperation can play to support development policy making, and South- South cooperation, in such a difficult historical juncture

Format:

The event will draw heavily on the contributors to The Oxford Handbook on Industrial Policy as well as on government officials of PTPRs beneficiary countries, and will aim to target policy makers in developing countries, as well as academics and other stakeholders such as civil society organizations, activists and young scholars.

Watch event recording