The Return of Industrial Policy in Data

The Return of Industrial Policy in Data

FEBRUARY 12, 2024 | Simon Evenett (Uni. of St. Gallen), Adam Jakubik (IMF), Fernando Martín (Global Trade Alert), and Michele Ruta (IMF)
The paper "The Return of Industrial Policy in Data" by Simon Evenett, Adam Jakubik, Fernando Martín, and Michele Ruta, published on February 12, 2024, introduces the New Industrial Policy Observatory (NIPO) and its monitoring of industrial policy interventions. The NIPO, a joint effort with the Global Trade Alert (GTA), aims to document emerging patterns and determinants of industrial policies in 75 jurisdictions covering 94% of global GDP. The study focuses on data from 2023, the first year of monitoring, and highlights the return of industrial policy, particularly in Advanced Economies (AEs), with a broadening range of intervention motives and heavy use of subsidies. Key findings include: - Most announced measures are also implemented. - Import restrictive industrial policies cover over 1/5 of world imports. - Regional differences are noted, with localization policies in North America and import barriers in Asia and Latin America. - Subsidies are the most common instrument of industrial policy, affecting trade flows and relative efficiency. - A tit-for-tat dynamic is observed, suggesting spillover effects through trade, with a 74% likelihood of another economy targeting the same product within 12 months after a major economy implements a subsidy. The paper also discusses the need for caution in interpreting the success of industrial policies, as they are often associated with factors like retaliation and political economy that are not clearly linked to market failures. Future research can evaluate the effectiveness of industrial policies in achieving their goals, assess side effects, and improve multilateral rules and surveillance mechanisms.The paper "The Return of Industrial Policy in Data" by Simon Evenett, Adam Jakubik, Fernando Martín, and Michele Ruta, published on February 12, 2024, introduces the New Industrial Policy Observatory (NIPO) and its monitoring of industrial policy interventions. The NIPO, a joint effort with the Global Trade Alert (GTA), aims to document emerging patterns and determinants of industrial policies in 75 jurisdictions covering 94% of global GDP. The study focuses on data from 2023, the first year of monitoring, and highlights the return of industrial policy, particularly in Advanced Economies (AEs), with a broadening range of intervention motives and heavy use of subsidies. Key findings include: - Most announced measures are also implemented. - Import restrictive industrial policies cover over 1/5 of world imports. - Regional differences are noted, with localization policies in North America and import barriers in Asia and Latin America. - Subsidies are the most common instrument of industrial policy, affecting trade flows and relative efficiency. - A tit-for-tat dynamic is observed, suggesting spillover effects through trade, with a 74% likelihood of another economy targeting the same product within 12 months after a major economy implements a subsidy. The paper also discusses the need for caution in interpreting the success of industrial policies, as they are often associated with factors like retaliation and political economy that are not clearly linked to market failures. Future research can evaluate the effectiveness of industrial policies in achieving their goals, assess side effects, and improve multilateral rules and surveillance mechanisms.
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[slides and audio] The Return of Industrial Policy in Data