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Production Network Features of Industrial Policy
Author:
Vanya Georgieva
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Series:
IMF Working Papers
Volume/Issue:
Volume 2025: Issue 023
Language:
English
Publication Date:
17 Jan 2025
DOI:
https://doi.org/10.5089/9798400296413.001
ISBN:
9798400296413
ISSN:
1018-5941
Pages:
65
Keywords:
Industrial Policy; Trade Policy; Subsidies; Global Value Chains; Production Networks; Spillovers; production network feature; input-output linkage; sector intervention; advanced economy; import tariff result; country-sector control variables; standard deviation; Exports; Income; Export restrictions; Emerging and frontier financial markets; Global; Asia and Pacific; Europe; Middle East and Central Asia
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Industrial policy has gained popularity in recent years and across all regions and income levels. Consequently, it is increasingly important to understand how governments choose the sectors they target. This analysis explores the role of domestic production networks in sector targeting, while controlling for other sector and global value chain characteristics. Combining datasets on industrial policy (Global Trade Alert) and input-output linkages (ICIO, OECD) provides novel insight into the network features of industrial policy. In particular, a sector’s ‘centrality’—i.e., its degree of connectedness - within the domestic production network is an important and significant predictor of sector intervention. The results indicate that industrial policy is used differently across regions, income groups, time periods, and types of policy tools. Notably, emerging economies tend to target more central sectors, while advanced economies target less central ones, on average. However, there has been a global shift toward more central sectors over time. Lastly, subsidies are deployed on more central sectors, while tariffs are used on less central ones.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund