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Industrial Policies: Handle with Care
Author:
Sandra Baquie
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,
Yueling Huang
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Florence Jaumotte https://isni.org/isni/0000000404811396 International Monetary Fund

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Jaden Kim
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Rafael Machado Parente
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Samuel Pienknagura https://isni.org/isni/0000000404811396 International Monetary Fund

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Series:
Staff Discussion Notes
Volume/Issue:
Volume 2025: Issue 002
Language:
English
Publication Date:
21 Mar 2025
DOI:
https://doi.org/10.5089/9798229000642.006
ISBN:
9798229000642
ISSN:
2617-6750
Pages:
31
Keywords:
Industrial Policies; Economic Performance; Externalities; Spillovers; Policy consideration; drivers of IPs; ips target; correlates of IPs; protectionist IPS; trading partner; value chain; Export subsidies; Structural policies; Structural reforms; Total factor productivity; Global; East Asia
Legal-disclaimer:
Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate.The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
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Industrial policies (IPs) are increasingly implemented, necessitating a reassessment of their benefits and costs. This study examines their economic and geopolitical drivers and their impact on targeted sectors. While IPs yield moderate and uneven economic gains, they are more effective when addressing highly-distorted upstream sectors with suitable tools. Structural reforms generally offer greater benefits and strengthen the link between IPs and economic performance. However, IPs may lead to significant fiscal costs and unintended spillovers, potentially accelerating economic fragmentation. Therefore, careful management of IPs is crucial.
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Cover Staff Discussion Notes
Staff Discussion Notes
ISSN:
2617-6750
Publisher:
International Monetary Fund