What is industrial policy?

What is industrial policy?

• A. A government's deliberate set of measures to promote, support, and modernize the industrial sector.
• B. A plan to regulate trade only.
• C. A market-driven approach with no government intervention.
• D. A policy to privatize all state-owned enterprises.

Answer: (A)

Industrial policy is when a government actively designs and implements measures to promote, support, and modernize its industrial sector. It uses a mix of tools—subsidies, tariffs or trade incentives, tax breaks, public investment in infrastructure, support for research and development, skills training, standards, and procurement policies—to build domestic capabilities, upgrade technology, boost productivity, and create jobs in priority industries. This approach is about shaping the economy to strengthen manufacturing and related activities, not simply letting markets run on their own or focusing only on one narrow area. For example, governments might back semiconductor fabs, renewable energy supply chains, or advanced manufacturing clusters to raise competitiveness. The other options describe narrower or opposite approaches—regulating trade alone, relying entirely on market forces, or privatizing state assets—whereas industrial policy centers on deliberate, coordinated actions to develop the industrial base.

Industrial policy is when a government actively designs and implements measures to promote, support, and modernize its industrial sector. It uses a mix of tools—subsidies, tariffs or trade incentives, tax breaks, public investment in infrastructure, support for research and development, skills training, standards, and procurement policies—to build domestic capabilities, upgrade technology, boost productivity, and create jobs in priority industries. This approach is about shaping the economy to strengthen manufacturing and related activities, not simply letting markets run on their own or focusing only on one narrow area. For example, governments might back semiconductor fabs, renewable energy supply chains, or advanced manufacturing clusters to raise competitiveness. The other options describe narrower or opposite approaches—regulating trade alone, relying entirely on market forces, or privatizing state assets—whereas industrial policy centers on deliberate, coordinated actions to develop the industrial base.