World Bank. Revisiting Industrial Policy: Strategic Options for Today
The chapter Revisiting Industrial Policy: Strategic Options for Today examines the renewed relevance of industrial policy in Latin America and the Caribbean. It highlights how governments in the region are reconsidering policy tools to address persistent challenges such as low productivity, limited diversification, and external vulnerabilities. The report analyzes how industrial policy can be adapted to current global conditions, including technological change and shifting trade dynamics.
The role of industrial policy in the region
Industrial policy is presented as a set of government interventions aimed at influencing economic structure and promoting development. In Latin America and the Caribbean, these policies have historically produced mixed results. While some initiatives supported industrialization, others led to inefficiencies due to protectionism and weak institutional frameworks.
The report emphasizes that revisiting industrial policy requires learning from past experiences. Rather than broad and distortionary interventions, modern approaches should focus on addressing specific market failures and fostering productivity growth.
Strategic options for industrial policy
The chapter outlines several strategic directions for implementing industrial policy effectively. One key approach is targeting sectors with high potential for innovation and value creation. Another is strengthening linkages between firms, institutions, and global markets to enhance competitiveness.
Additionally, the report highlights the importance of improving public sector capabilities. Effective industrial policy depends on strong institutions, transparency, and the ability to evaluate and adjust policies over time. Without these elements, interventions risk becoming inefficient or politically driven.
Industrial policy and global challenges
The current global context has increased the importance of industrial policy. Issues such as supply chain disruptions, climate change, and technological transformation require coordinated policy responses. In this environment, Latin America and the Caribbean face the challenge of integrating into global value chains while building domestic capabilities.
The report suggests that industrial policy should align with broader development goals, including sustainability and inclusion. This implies supporting green technologies, promoting digital transformation, and ensuring that economic growth benefits a wider segment of the population.
Conclusion
The chapter concludes that industrial policy can be a useful tool for development if it is carefully designed and implemented. In Latin America and the Caribbean, this requires a shift from traditional protectionist approaches toward more targeted, flexible, and evidence-based strategies.
Reference
World Bank. (2026). Revisiting industrial policy: Strategic options for today. En Latin America and the Caribbean Economic Update. World Bank. https://doi.org/10.1596/978-1-4648-2337-4