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New perspectives and issues in industrial policy for sustainable development: from developmental and entrepreneurial to environmental state

Author

Listed:
  • Ioanna Kastelli

    (National Technical University of Athens
    Hellenic Open University)

  • Lukasz Mamica

    (Krakow University of Economics)

  • Keun Lee

    (Seoul National University
    University of Johannesburg
    CIFAR (IEP))

Abstract

The increasingly acute consequences of the climate crisis, the COVID-19 pandemic, and the energy crisis have put industrial policy back. The papers in this issue examine how different countries implement industrial policy for sustainable development from a variety of perspectives. A successful transition to sustainable development seems to require not only the mix of carrots and sticks but also a right mix of creation versus destruction, as in the case of the creation of renewable businesses and the destruction of fossil-fuel businesses. Furthermore, because institutional diversity and the risk of capture can result in very distinct economic, social, and environmental effects, consideration of heterogeneity at the country and sector levels and coordination of vested interests are essential ingredients for sustainable industrial policies, as shown by the case of industrial policy in France and the two industry cases in India. By contrast, the Amazon Fund case is indicative of the three success elements: multi-stakeholder governance, pay-for-performance funding, and non-reimbursable project financing. These three elements can be summarized as local ownership and accountable governance, provided with both carrots and sticks. The problematic case of urban development driven by the oil industry in Ghana can be criticized in terms of the lack of local ownership of the oil industry, which has led to all rents being monopolized by the absentee class. By comparison, the mixed success of cases of industrial symbiosis in Uganda is attributed to the lack of effective carrots. In sum, industrial policy for sustainable development requires handling well all three types of failure, namely, market, system, and capability failures, because it necessitates building capabilities of involved actors and coordinating actions of agents, in addition to providing optimal incentives to reflect externalities of global public goods. Overall, the shifting focus of industrial policy is consistent with the shift of the role of the state, from developmental to entrepreneurial, and finally to environmental state.

Suggested Citation

  • Ioanna Kastelli & Lukasz Mamica & Keun Lee, 2023. "New perspectives and issues in industrial policy for sustainable development: from developmental and entrepreneurial to environmental state," Review of Evolutionary Political Economy, Springer, vol. 4(1), pages 1-25, April.
    • Handle: RePEc:spr:revepe:v:4:y:2023:i:1:d:10.1007_s43253-023-00100-2
    DOI: 10.1007/s43253-023-00100-2
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    More about this item

    Keywords

    Industrial policy; Sustainable development; Capability failure; Institutional variety; Green growth; Industrial transformation;
    All these keywords.

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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