Making industrial policy relevant again AMANDA JANOO argues that we must stop peddling ‘one-size-fits-all’ solutions “There is only one measure of success: are you exporting something different than you were five years ago?” a man bellowed across the conference hall. The most recent industrial policy conference in Madagascar spanned two days and consisted of experts and academics promoting new models on the micro-foundations of innovation or the promises of successful “structural change”. At the back of the hall, a group of Malagasy policy practitioners listened silently. After the second session, an economic advisor to the president took me aside. “I’m a simple man so I don’t understand all of this,” he said as he waved at the PowerPoint projector. “But I know that our people are struggling and that they need jobs and better opportunities.” It seems that when considering the extreme levels of poverty in Madagascar, the industrial policy concepts and theories on show lack relevance for their day-to-day work. I realized in speaking with this man that he was a “civil servant” in every sense of the term. He believes that the government has a responsibility to develop an economy that serves the needs and desires of its population, a goal that remains mostly absent from the conference, and from industrial policy discussions at large. Though the welfare of the general populace of Madagascar should be the predominant concern
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when discussing industrial policies, such “non-technical” considerations are likely to be met with eye-rolls if openly discussed in such a conference setting. The last time industrial policy had its heyday, development was viewed as a singular pathway that transforms poor countries into rich nations through the power of emulation. GDP growth was believed to be the magic elixir that would bring the masses out of poverty and deliver development and property to all. Industrial policy emerged within this context, and was understood as the methods employed by the government to stimulate development and achieve an “industrialized” economic structure. Our understanding of industrial policy had two parts: The first was functional, in that industrial policy represented a government’s active intervention in the economy to achieve their objectives. The
“Industrial policy emerged… and was understood as the methods employed by the government to stimulate development and achieve an “industrialised”economic structure.”
second was a value judgment, which assumed that the main purpose of industrial policy was to promote growth through more productive activities. Beginning in the late 1970s, industrial policy faded from the limelight and governments were told to take a handsoff approach to development, and to trust in the transformative powers of the global free market. This ‘one-size-fits-all’ approach resulted in situations where growth was accompanied by rising inequalities, persistent poverty and devastating environmental degradation. As a result, the development community started to emphasize that the pattern of growth mattered just as much, if not more than the pace. Around the world, developed and developing countries alike began reasserting their right and responsibility to influence their development trajectories in accordance with their unique context and objectives. Such a situation was therefore ripe for the re-emergence of industrial policy as a tool for achieving a holistic understanding of development. We can see Brazil using industrial policy to promote broad-based poverty reduction, India attempting to ensure a more stable domestic food supply, and China encouraging the expansion of green industries. The Sustainable Development Goal 9’s emphasis on “inclusive and sustainable industrialization” seems to have emerged in acknowledgement of this phenomenon. However, for industrial policy advisors
Published on Sep 8, 2016
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