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Industrial Policy in Britain provides an introduction to, and assessment of, the theory and practice of industrial policy and government-industry relations since 1945. It ranges widely covering all the key industrial sectors - including agriculture and services as well as energy and manufacturing - at local, national and European level

The theoretical case for industrial policy is a strong one. The market failures that industrial policies target in markets for credit, labor, products, and knowledge have long been at the core of what development economists study. The conventional case against industrial policy rests on practical difficulties with its implementation. Even though the issues could in principle be settled by empirical evidence, the evidence to date remains uninformative. Moreover, the conceptual difficulties involved in statistical inference in this area are so great that it is hard to see how statistical evidence could ever yield a convincing verdict. A review of industrial policy in three non-Asian settings El Salvador, Uruguay, and South Africa highlights the extensive amount of industrial policy that is already being carried out and frames the need for industrial policy in the specific circumstances of individual countries. The traditional informational and bureaucratic constraints on the exercise of industrial policy are not givens; they can be molded and rendered less binding through appropriate institutional design. Three key design attributes that industrial policy must possess are embeddedness, carrots-and-sticks, and accountability.

China's current industrial policy has been pursuing long term objectives and can be traced back to the late 1970s. The new CCP leadership under General Secretary Xi Jinping has not altered in any fundamental way these objectives. These are part of a long-term policy defined in the framework of the 11th and 12th Five-Year Plans and other long-term programmes for scientific and technological development. Foreign investors have recently expressed concern due to negative media campaigns and government crackdowns on foreign multinational enterprises (MNEs) operating in China: the prosecution for bribery of GSK executives, fines imposed on Danone and five other MNEs under China's anti-monopoly regulations1 and shaming campaigns against GSK, VW, Samsung or Apple. At the same time, blatant privileged access to key PRC public procurements is granted to Chinese national champions, notably in the development of hundreds of thousands of 4G base stations.2 Moreover, Xi Jinping is explicitly rehabilitating Mao's legacy and CCP propaganda is encouraging virtuous and altruist behaviour, putting forward ideological icons from the 1960s.3 There has been a lot of speculation over whether this represents a change in policy on the part of the Chinese leadership that will restrict the room for manoeuvre of foreign investors in order to give more space for the development of Chinese national champions (as countries like Japan or South Korea once did) or simply a temporary leftist turn to strengthen Xi Jinping's hold on the CCP before he can actually proceed with an agenda of further liberalisation of the economy, as previously forecast by some analysts.

China's current industrial policy has been pursuing long term objectives and can be traced back to the late 1970s. The new CCP leadership under General Secretary Xi Jinping has not altered in any fundamental way these objectives. These are part of a long-term policy defined in the framework of the 11th and 12th Five-Year Plans and other long-term programmes for scientific and technological development. Foreign investors have recently expressed concern due to negative media campaigns and government crackdowns on foreign multinational enterprises (MNEs) operating in China: the prosecution for bribery of GSK executives, fines imposed on Danone and five other MNEs under China's anti-monopoly regulations1 and shaming campaigns against GSK, VW, Samsung or Apple. At the same time, blatant privileged access to key PRC public procurements is granted to Chinese national champions, notably in the development of hundreds of thousands of 4G base stations.2 Moreover, Xi Jinping is explicitly rehabilitating Mao's legacy and CCP propaganda is encouraging virtuous and altruist behaviour, putting forward ideological icons from the 1960s.3 There has been a lot of speculation over whether this represents a change in policy on the part of the Chinese leadership that will restrict the room for manoeuvre of foreign investors in order to give more space for the development of Chinese national champions (as countries like Japan or South Korea once did) or simply a temporary leftist turn to strengthen Xi Jinping's hold on the CCP before he can actually proceed with an agenda of further liberalisation of the economy, as previously forecast by some analysts.

Many scholars acknowledge that industrial policy can work well in countries with strong merit-based public services and political checks and balances. However, there are very few empirical studies available that analyse industrial policies in low and lower-middle income countries. This study intends to help fill this gap by assessing the quality of industrial policies and industrial policy making in Mozambique. To this end, the study draws on an extensive review of the relevant policy documents, expert interviews and two case studies about the promotion of the cashew industry and the promotion of linkages between foreign direct investment and small and medium-sized enterprises. The authors conclude that the Government of Mozambique lacks the vision, leadership and proper incentives needed to create an appropriate policy mix of investment climate improvements – to create the conditions for private investments and market competition – and targeted interventions – to accelerate productivity growth and enhance firms' competitiveness.

Tunisia's industrial policy is generally perceived as 'best practice' in its regional context. A semi-closed statist economy has increasingly been turned into an outward-oriented market economy which has consistently produced growth rates well above the regional average. This has mainly been due to consistent government investment in public infrastructure and particularly in the education sector, a comprehensive, incremental approach to socio-economic reforms, and a professional civil service able to 'deliver' and harness foreign financial inflows for development-oriented purposes. But the Tunisian 'miracle' is still rather fragile, and recent events have proven this. The main fault-lines are a high degree of vertical fragmentation, a strong dependency on a few foreign markets, a strong focus on simple assembly activities, and a correspondingly limited capacity to create qualified employment. A major obstacle for the regime's declared goal to achieve a qualitative breakthrough toward a fully developed economy and enhance upward mobility for the broad public has also been the fact that the country's political and economic elites are intertwined in numerous, intricate ways, and that there are thus few incentives for private businessmen to make the necessary long-term investments in knowledge-intensive sectors.

Executive SummaryAlongside the challenge of maintaining economic competitiveness in the face of great uncertainty, Brexit brings an opportunity for the government to set out a new industrial strategy. The case for doing so rests on the need to address areas of persistent structural weakness in the UK economy, including low productivity. But it is important that any new industrial strategy be based on appropriately granular data reflecting the real structure of the UK corporate sector: the overwhelmingly preponderant role of services as opposed to manufacturing, for example; the importance of young, fast-growing firms as opposed to SMEs; the relatively high failure rate of companies in the UK; and the relative lack of successful mid-sized firms. Such a data-driven approach might spawn an industrial strategy quite different from the piecemeal programmes of recent years.Internationally, the UK is a laggard in this area, and the recently-created Industrial Strategy Council does not look strong enough to change that position. To move forward, the government needs to make industrial strategy a central plank of economic policy, embedded at the heart of the administration with its own staff and funding, and operations based on a comprehensive review of the economic contribution and potential of various types of firm. Needless to say, it cannot be a substitute for a continuing commitment to competition and markets, or a stalking horse for protectionism: interventions should be justified by carefully-argued market failure arguments, be time-limited, and transparently evaluated.