Industrial Policy for Development

Can industrial policy be a catalyst for poverty alleviation, job creation, and food security, as well as address the complexities of informal labor markets?

In their keynote presentation at the Industrial Policy for Africa conference, Ana Margarida Fernandes, World Bank Lead Economist, Development Research Group; and Tristan Reed, World Bank Economist, Development Research Group; authors of the upcoming World Bank report on industrial policy, shared key insights from the report and discussed the role of industrial policy for economic transformation in developing countries.

Ana Margarida Fernandes reframed the debate on industrial policy by grounding it in the realities of developing countries. Drawing on new evidence, she showed that industrial policy is already widely used across low‑ and middle‑income countries to create jobs, attract investment, and spur structural transformation. Her presentation broadened the definition of industrial policy beyond narrow sector targeting, emphasizing strategic business activities across agriculture, services, and manufacturing.

When it comes to industrial policy for development...it doesn’t involve trade‑offs, if business activities with positive spillovers are being promoted, this can lead to higher GDP, higher welfare, and society as a whole being better off.

She also offered a practical framework to help governments choose feasible policy tools based on their institutional capacity, market size, and fiscal space.

Tristan Reed discussed how well-designed public inputs, targeted subsidies, procurement, and selective market interventions can boost learning, productivity, and structural transformation, drawing on global experience from East Asia, Africa, and Latin America. He highlighted how industrial policy works best when it is disciplined, pro-competitive, time-bound, and embedded in strong institutions and complemented with investments in infrastructure, skills, and governance.

For a developing economy, any new business activity can be strategic...if you're doing something new in the economy that's going to require learning, it's going to create spillovers for others.

His presentation outlined how industrial policy is less about picking winners and more about enabling learning, experimentation, and diversification where markets alone underinvest.

Read more about the conference and watch additional sessions here.