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Industrial policies: Handle with care

In: The State of Globalisation

Author

Listed:
  • Baquie, Sandra
  • Huang, Yueling
  • Jaumotte, Florence
  • Kim, Jaden
  • Machado Parente, Rafael
  • Pienknagura, Samuel

Abstract

Industrial policies (IPs) are increasingly implemented, necessitating a reassessment of their benefits and costs. This study examines their economic and geopolitical drivers and their impact on targeted sectors. While IPs yield moderate and uneven economic gains, they are more effective when addressing highly-distorted upstream sectors with suitable tools. Structural reforms generally offer greater benefits and strengthen the link between IPs and economic performance. However, IPs may lead to significant fiscal costs and unintended spillovers, potentially accelerating economic fragmentation. Therefore, careful management of IPs is crucial.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Baquie, Sandra & Huang, Yueling & Jaumotte, Florence & Kim, Jaden & Machado Parente, Rafael & Pienknagura, Samuel, 2025. "Industrial policies: Handle with care," CEPR Press Book Chapters, in: Baldwin, Richard & Ruta, Michele (ed.), The State of Globalisation, edition 1, volume 1, chapter 6, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ebchap:p390-06
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    Cited by:

    1. Adam Jakubik & Michele Ruta & Samuel Pienknagura, 2026. "The New Era of Industrial Policy," EconPol Forum, CESifo, vol. 27(01), pages 04-08, January.
    2. Kwon, Namhoon & Park, Minsoo & Sung, Won, 2026. "Is the pursuit of a competition-friendly industrial policy desirable? Evidence from Korea's post-Asian Financial Crisis policy shift," International Journal of Industrial Organization, Elsevier, vol. 104(C).
    3. Yang, Dilan & Chattha, Muhammad Khudadad, 2026. "Industrial Policy and Economic Growth : Evidence from Saudi Arabia," Policy Research Working Paper Series 11329, The World Bank.

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