New Industrial Policy and Manufacturing: Options for International Trade Policy

Industrial policy is not new yet it has seen a revival in recent years in economies across the income ladder. This revived industrial policy is less about market restrictions, focusing more on the facilitation of R&D, technological innovation, productivity gaps, and competitiveness, as well as systembuilding and coordination-enhancing policies that promote interlinked activities with a horizontal impact. Its objectives can also include addressing larger goals reflecting global concerns. Despite this renewed emphasis, little attention has been paid to the link between new industrial policy and the world trade and investment systems in the 21st century. The present paper seeks to examine the challenges raised and the opportunities availed by the resurgence of industrial policies and their overlap with the global trading system. Based on this examination, a set of policy options are put forward for improving international trade rules to support industrial policy goals that enhance competitiveness and sustainable development.