The Global Centre for Risk and Innovation (GCRI)
Industrial policy is public action that aims to change the structure of an economy: supporting new sectors, building capabilities, attracting investment and moving firms into higher-value activities. It has returned to the centre of policy in many countries, and its record is mixed. This page sets out how industrial policy works and fails, how upgrading is measured, and what evidence serves the ministries and agencies that design it.
GCRI · In development · service level R0
Industrial policy is government action that deliberately aims to change the structure of an economy by supporting sectors, capabilities and technologies. Countries diversify most easily into nearby capabilities, coordination can fix missing pieces, and performance conditions and exit rules keep support from protecting inefficient firms.
For industrial policy and upgrading, in GCRI's spatial-intelligence reading, the map opens on night lights, population density and true-colour imagery with true colour from NASA GIBS, framed on Africa; every other NASA layer, live feed and forecast waits in the layer list.
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For industrial policy and upgrading, in GCRI's spatial-intelligence reading, the map opens on night lights, population density and true-colour imagery with true colour from NASA GIBS, framed on Africa; every other NASA layer, live feed and forecast waits in the layer list.Satellite and model products as NASA publishes them, each with its own date; indicators, not assessments of any place; claim ceiling INTEGRATED.
Layers and dates
The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.
Industrial policy and upgrading · National economy · Scenario: import price shock
| Food processing | ▼ 3 | 3462 | Backward |
| Transport | ▼ 6 | 1142 | Forward |
| Construction | ▼ 3 | 2255 | Backward |
| Retail | ▼ 3 | 11,770 | Demand |
local units, billions, illustrative
Capabilities, innovation and manufacturing. The dossier below sets out how the risk develops, what is measured, where the data come from, how it is modelled and who decides.
Countries tend to diversify into products that use capabilities close to those they already have. Jumps far from existing strengths are harder.
New industries may need infrastructure, skills, suppliers and standards at once. Policy can coordinate these when markets alone do not.
Support without performance conditions and exit rules can protect inefficient firms. Clear targets, monitoring and sunset clauses keep policy honest.
Trade agreements, subsidy rules and competing subsidies abroad limit and shape what industrial policy can do.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Upgrading | Moving firms or economies into higher-value products, processes or functions. |
| Economic complexity | A measure of the diversity and sophistication of a country's productive capabilities. |
| Sunset clause | A provision that ends a policy at a set date unless renewed. |
Each indicator carries its unit, its cadence, the kind of source behind it and the evidence label a value would carry. No values are shown: a programme supplies them under its own authority.
| Indicator | Unit | Cadence | Source type | Label |
|---|---|---|---|---|
| Manufacturing value added | share of GDP | annual | National accounts | OFFICIAL |
| Export diversification | number of products exported with comparative advantage | annual | Trade data | ESTIMATED |
| Medium and high-tech share of manufacturing | percent of manufacturing value added | annual | UNIDO statistics | OFFICIAL |
| Industrial policy interventions | count by instrument | annual | Policy trackers | REPORTED |
| Foreign direct investment inflows by sector | currency units | annual | Balance of payments and investment data | OFFICIAL |
| Support programmes with evaluations | percent of programmes | per review | Programme records | REPORTED |
The topic as a computational graph: named sources feed the methods, an evidence review gates the outputs, and the decisions stay with the authorities that hold them.
Fig. 02Nodes carry their type, two metric rows and a state; connectors show what feeds what; dashed frames name the owners; the timeline is the cadence. Design of the pipeline, not a record of a run.
Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.
| Source | What it gives | Licence class |
|---|---|---|
| UNIDO industrial statistics and Competitive Industrial Performance data | Manufacturing structure and performance | Public, UNIDO terms |
| Atlas of Economic Complexity (Harvard Growth Lab) | Product space and diversification analysis | Open, licence to check |
| New Industrial Policy Observatory (IMF and partners) | Tracking of industrial policy measures | Public, terms to check |
| UNCTAD World Investment Report | Investment flows and policies | Public, UNCTAD terms |
| OECD industrial policy and subsidies databases | Government support to industry | Public, OECD terms |
Economic Development prepares evidence. The decisions below are taken by the authorities named, under their own rules, and never by the platform.
| Who decides | The question | Evidence this page serves |
|---|---|---|
| Ministries of industry and trade | Which sectors and capabilities to support and with what conditions | Capability maps; instrument reviews |
| Investment promotion agencies | Which investors and sectors to target | Investment and diversification evidence |
| Finance ministries and auditors | Whether support programmes deliver value | Evaluation evidence |
Economies develop by learning to produce more complex goods and services. This requires capabilities: skills, know-how, supplier networks, infrastructure and institutions. Capabilities accumulate through doing, which creates a coordination problem. Firms may not invest in a new activity if the suppliers, skills and infrastructure do not yet exist, and these will not appear until there is demand.
Industrial policy aims to solve such problems through targeted support, public investment, research and training, and sometimes trade measures. Historical experience includes both successes and costly failures. Evidence suggests that discipline matters: support linked to performance, competition, export orientation and the capacity to withdraw support from failing activities.
Global value chains change the picture. Countries can enter at particular stages without building an entire industry, but may find it hard to move into higher-value stages.
Measures of the diversity and sophistication of exports. They describe structure but do not prove causation.
Tracing value added across countries and sectors using network methods. Tables are aggregated and published with delay.
Quasi-experimental studies of specific measures using causal inference. Policies rarely have clean comparison groups.
Comparative analysis of national experiences. Context limits transferability.
Evidence on industrial policy is contested. Analyses present competing findings and the assumptions behind them.
The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.