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Rollback of Market Economics
Industrial policy has been rehabilitated globally despite the ideological bias.
A few months back, the Financial Times of London carried an interesting headline titled “US–China rivalry drives the retreat of market economics: Industrial policy is back in fashion as geopolitical tensions increase.” But unfortunately, this is an old story. Rehabilitation of industrial policy, which began after the global financial crisis (GFC), is now almost complete. In fact, the World Investment Report 2018 noted that as many as 101 economies, which account for 90% of the global gross domestic product (GDP), have formally adopted industrial policies after the GFC.
Most of these countries mainly use incentives and performance requirements as tools to guide industrial investments in line with their national priorities. Interestingly, two years back, the International Monetary Fund (IMF) also brought out a publication titled “The return of the policy that shall not be named: Principles of Industrial Policy.” Certainly, correcting the ideological bias has not been easy, even for multilateral organisations.
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