A comprehensive framework for national economic transformation, productive capacity, technological development and strategic autonomy.
Industrial policy is best understood not as a policy for manufacturing, but as a deliberate national strategy for shaping the structure, capabilities, competitiveness, resilience and future productive potential of an economy.
It concerns what a country produces, how it produces it, what it knows how to design and build, what it owns, what it controls, what it depends upon, what it can finance, what it can export, and how effectively it converts its resources into enduring national prosperity and strategic influence.
Figure 1
Industrial policy is ten strategies at once
One agenda, many instruments
The distinction that mattersA country can have a substantial manufacturing sector without possessing advanced industrial capabilities. Equally, a country can be wealthy, have a large financial sector and enjoy high living standards while remaining strategically dependent on external suppliers for essential technologies, industrial inputs and productive capabilities.
Figure 1. The ten dimensions that a serious industrial strategy has to hold together.
Industrial policy addresses these structural questions.
The ultimate objective is not necessarily to manufacture everything domestically. It is to establish an economically viable, technologically capable, financially sustainable and strategically resilient national economy, with an appropriate position within the international division of labour.
1. Defining industrial policy
1.1 A comprehensive definition
Industrial policy is the coordinated set of national objectives, institutions, regulations, public investments, financial instruments, market interventions, technological programmes, trade arrangements and private-sector incentives through which a state influences the development, composition, capabilities, location, ownership, competitiveness and strategic orientation of its productive economy.
Figure 2
The ten things industrial policy encompasses
From economic structure to national development
01
Economic structure
Which sectors exist, their relative importance, productivity and interdependencies.
02
Industrial capabilities
What the country can design, engineer, manufacture, process, maintain and operate.
03
Technological capabilities
The ability to develop, absorb, adapt and commercialise technology.
04
Capital formation
The mobilisation and allocation of financial resources towards productive investment.
05
Human capital
Skills, expertise, institutions and organisational capabilities.
06
Infrastructure
The physical and digital foundations of productive activity.
07
Market development
Competitive domestic markets and access to international markets.
08
Trade positioning
Management of imports, exports, dependencies and supply-chain participation.
09
Strategic resilience
The ability to withstand shocks, disruptions, coercion and structural dependencies.
10
National development
Conversion of productive capabilities into incomes, employment, fiscal capacity and prosperity.
Figure 2. The scope of the policy, stated as ten connected objects of attention.
1.2 What industrial policy is not
| Misconception | More accurate interpretation |
|---|---|
| Industrial policy means manufacturing | Manufacturing is one component of a wider productive ecosystem. |
| Industrial policy means building factories | Factories require technology, skills, capital, infrastructure, suppliers and markets. |
| Industrial policy means self-sufficiency | Strategic resilience usually requires selective autonomy and diversified interdependence. |
| Industrial policy means subsidising domestic businesses | Support must be conditional, disciplined and linked to measurable outcomes. |
| Industrial policy means picking national champions | Competitive capabilities and productive ecosystems matter more than political selection of individual companies. |
| Industrial policy means technological leapfrogging | Technological advancement requires foundations, absorptive capacity and institutional maturity. |
| Industrial policy means protecting domestic industries | Protection without productivity improvement can create permanent inefficiency. |
| Industrial policy is separate from foreign policy | Trade, investment, technology access and strategic dependencies are fundamentally international. |
| Industrial policy is separate from financial policy | Productive investment depends on the structure, availability, cost and duration of capital. |
A particularly important distinction is between industrial activity and industrial capability.
Activity versus capability
A country might assemble sophisticated electronics using imported components, foreign-owned intellectual property, imported production equipment and externally controlled supply chains. It participates in advanced manufacturing, but may possess relatively little control over the underlying technology, design, critical inputs or value capture.
Conversely, a country with relatively limited domestic manufacturing might have considerable industrial influence through semiconductor design, specialised engineering, industrial software, intellectual property, process technology, capital equipment or advanced materials.
2. Industrial policy as a national systems problem
Industrial policy should not be designed in isolation. It is an expression of the country's overall economic model, institutional maturity, financial capacity, geopolitical position and national development objectives.
Figure 3
The national industrial policy system
Interests, foundations, instruments, capabilities, outcomes
01
National interests and strategic objectives
Prosperity · security · sovereignty · competitiveness · resilience · influence.
02
Domestic and economic foundations
Institutions and governance; productivity, income, fiscal capacity, savings and investment.
03
Industrial foundations and international position
Energy, materials, infrastructure and suppliers; trade, alliances, markets, technology access and geopolitics.
04
Industrial policy instruments
Investment · finance · regulation · R&D · procurement · skills · trade · infrastructure.
05
Productive capabilities and industrial ecosystems
Technology · enterprises · supply chains · production · services · innovation.
06
National outcomes
Higher productivity · prosperity · exports · fiscal strength · resilience · strategic influence.
And back againFeedback loops, evaluation and institutional adaptation operate throughout the system. The chain is not a one-way pipeline: outcomes should reshape objectives and instruments.
Figure 3. The national industrial policy system as a loop rather than a ladder.
2.1 Domestic realities and national circumstances
Industrial policy must begin with an honest assessment of the country as it actually exists, rather than an aspirational model of what policymakers would like it to become.
| Dimension | Questions industrial policy must address |
|---|---|
| Geography | Does the country have access to ports, navigable waterways, land corridors, natural resources and major markets? |
| Demographics | Is the population growing, ageing, highly urbanised or experiencing labour shortages? |
| Education | Is there sufficient technical, vocational, scientific and managerial expertise? |
| Institutional quality | Can the state formulate policy, execute projects, enforce contracts and regulate effectively? |
| Political stability | Are industrial strategies sufficiently durable across electoral cycles? |
| Governance | Are procurement, subsidies and investment decisions transparent and accountable? |
| Energy | Is electricity affordable, reliable, abundant and sufficiently diversified? |
| Natural resources | What minerals, agricultural resources, energy resources and other inputs are available? |
| Domestic market | Is there sufficient purchasing power and demand to sustain particular industries? |
| Existing industrial base | What capabilities, enterprises, suppliers and infrastructure already exist? |
| Social structure | What are the implications for regional development, employment, inequality and social cohesion? |
| Environmental conditions | What are the country's ecological constraints and climate-related vulnerabilities? |
An industrial policy suitable for Germany, India, South Korea, Spain, Brazil, Singapore or Ethiopia cannot simply be transplanted between them. The underlying principles may be shared, but the feasible industrial trajectory will differ.
2.2 Economic strength
Industrial policy both depends upon and contributes to economic strength.
One particularly important consideration is the distinction between economic size and economic sophistication. A large economy can have considerable purchasing power without possessing advanced technological capabilities; a smaller economy can have disproportionately sophisticated industrial capabilities in particular sectors.
2.3 Financial strength and capital architecture
Industrial transformation is capital-intensive and frequently requires investment horizons extending well beyond ordinary commercial lending cycles.
Public
Can the state finance long-term infrastructure?
Fiscal headroom, borrowing capacity and the ability to absorb investment risk without destabilising macroeconomics.
Private
Can the market finance industry?
Bank lending, corporate equity, venture and growth capital, pension and institutional participation in long-term productive investment.
External
Can the country import capability?
Foreign direct investment, foreign-exchange reserves, currency stability and the ability to finance machinery, technology and critical inputs.
Cost
Can projects be financed competitively?
Interest rates, maturities and risk premia decide whether an otherwise sound industrial project is ever built.
A country can have an attractive industrial strategy on paper but lack the financial architecture necessary to implement it. Equally, excessive public borrowing to finance industrial ambitions can weaken macroeconomic stability and undermine the very objectives being pursued.
2.4 Foreign policy and geopolitical position
Industrial policy is inseparable from international relationships. A country's industrial prospects depend partly on its relationships with technology-leading nations, strategic allies, major trading partners, regional economic blocs, critical mineral suppliers, energy exporters, international financial institutions, foreign investors and multilateral standards organisations.
Questions to answer
Which technologies can the country access, and which might be restricted by export controls? Which markets are accessible under existing agreements? Which suppliers represent concentration risks? Which partnerships could accelerate domestic capabilities? Where does the country hold negotiating leverage, and which industries are exposed to geopolitical tension?
The strategic objective is not isolation. It is to establish a position in which international economic integration creates mutual benefits without exposing the country to unacceptable dependencies.
2.5 Political stability and institutional continuity
Industrial transformation is usually a multi-decade undertaking. A semiconductor ecosystem, nuclear energy programme, advanced materials industry or national engineering capability cannot be developed reliably through short-term political initiatives.
Political continuity does not mean policy immutability. A capable state must be able to maintain its long-term direction while adapting its instruments to changing economic, technological and geopolitical circumstances.
3. The principal domains of industrial policy
Industrial policy should be considered across a broad set of interconnected domains. The following is a useful organising taxonomy: a comprehensive classification, rather than a hierarchy of importance.
Figure 4
Sixteen interconnected domains
Only one of them is manufacturing
01
Macroeconomic and structural foundations
Productivity, economic structure, macroeconomic stability.
02
Industrial structure and sector development
Sector composition, industrial ecosystems, value chains.
03
Science, technology and innovation
R&D, technology transfer, commercialisation, IP.
04
Capital and financial architecture
Banking, development finance, equity, investment.
05
Energy and natural resources
Electricity, fuels, minerals, materials, water.
06
Physical and digital infrastructure
Transport, logistics, telecommunications, data.
07
Human capital and workforce
Education, engineering, vocational skills, management.
08
Enterprise and business development
SMEs, scale-ups, large enterprises, entrepreneurship.
09
Trade and international economic relations
Exports, imports, market access, trade agreements.
10
Foreign investment and ownership
FDI, joint ventures, domestic ownership, technology access.
11
Public procurement and domestic demand
Public purchasing, standards, market formation.
12
Competition and market structure
Competition, market concentration, productivity.
13
Regional and spatial development
Industrial clusters, economic geography, regional balance.
14
Environmental and resource sustainability
Decarbonisation, circularity, resource efficiency.
15
Strategic autonomy and economic security
Critical dependencies, resilience, continuity of supply.
16
Institutions, governance and implementation
State capacity, coordination, evaluation, accountability.
Figure 4. Sixteen domains, no ordering of importance implied.
4. Industrial structure and sector development
This is the most recognisable dimension of industrial policy, but it is only one component. The objective is to understand and shape the composition of the national economy.
4.1 Primary industries
The relevant policy question is not simply whether a country possesses natural resources. It is how much economic value it can derive from those resources, how effectively they are managed, and how they contribute to downstream industries.
The resource value staircase
Mineral extraction → mineral processing → refined materials → advanced materials → industrial components → finished products
However, every additional stage must be economically justified. Domestic processing is not automatically more competitive than importing refined materials.
4.2 Secondary industries
The objective is to develop productive capabilities, not merely maximise the number of factories.
4.3 Tertiary industries
Industrial policy must also recognise the productive contribution of services: banking and financial services, insurance, logistics and distribution, engineering consultancy, telecommunications, software development, industrial automation, technical maintenance, testing and certification, professional services, research and development services, design and product development. Many modern industrial economies derive substantial value from the services surrounding physical production.
4.4 Quaternary and knowledge-intensive activities
Scientific research, advanced engineering, artificial intelligence, semiconductor architecture and design, biotechnology, industrial software, cybersecurity, advanced computing, data science, intellectual property development and technology commercialisation can create significant national economic value without requiring the country to manufacture every physical component domestically.
4.5 Industrial ecosystem completeness
A useful way of assessing industrial development is to examine the extent to which the country possesses the different layers of an industrial ecosystem.
| Layer | Example capabilities |
|---|---|
| Resource base | Minerals, energy, water, agricultural inputs |
| Processing | Refining, smelting, chemical processing |
| Materials | Steel, alloys, polymers, composites, semiconductors |
| Components | Motors, sensors, batteries, microelectronics |
| Capital equipment | Machine tools, robotics, industrial machinery |
| Engineering | Design, simulation, testing, systems integration |
| Production | Assembly, fabrication, processing, manufacturing |
| Software | Industrial control, AI, digital twins, automation |
| Services | Maintenance, logistics, certification, financing |
| Research | Universities, laboratories, applied science |
| Commercialisation | Start-ups, licensing, scaling, exports |
| Standards | Certification, technical standards, quality systems |
The strategic question: where does the country sit within the value chain, and which capabilities does it actually control?
5. Science, technology and innovation policy
Industrial development cannot be separated from the national science and technology ecosystem. A comprehensive framework must distinguish between several levels of technological capability.
| Level | Capability |
|---|---|
| 1. Adoption | Purchasing and using existing technologies |
| 2. Operation | Operating and maintaining sophisticated systems |
| 3. Absorption | Understanding and integrating imported technologies |
| 4. Adaptation | Modifying technologies for domestic conditions |
| 5. Engineering | Designing systems, components and industrial processes |
| 6. Development | Creating new technologies and products |
| 7. Innovation | Developing commercially valuable technological advances |
| 8. Frontier leadership | Establishing internationally competitive technological frontiers |
These are analytical categories, not a mandatory sequence. Countries can lead in some technologies while adopting others.
Principal policy areas
The technology absorption problem
An important mistake in industrial policy is assuming that purchasing advanced machinery automatically creates advanced industrial capabilities. It does not.
Technology adoption requires engineers who understand the equipment, technicians capable of maintaining it, organisations able to integrate it, suppliers able to support it, managers capable of improving production processes and institutions able to develop the next generation of capabilities. This is why absorptive capacity is as important as technology acquisition.
6. Energy, natural resources and materials policy
Energy and materials are fundamental determinants of industrial competitiveness. A country cannot realistically pursue extensive industrial development without understanding its energy and material requirements.
6.1 Energy architecture
Different industries have different energy requirements. A data centre, aluminium smelter, semiconductor fabrication facility, steelworks and pharmaceutical plant cannot be treated as equivalent electricity consumers.
6.2 Critical minerals and advanced materials
The policy question extends beyond mineral ownership. It encompasses geological exploration, extraction, refining, processing, environmental management, materials science, industrial applications and international supply relationships.
6.3 Resource security
Figure 5
What a resource security assessment must cover
Ten tests of exposure
The principleA country does not need to own every resource. It needs reliable access to the resources essential to its economic model.
Figure 5. Resource security is about access and substitutability, not ownership alone.
7. Infrastructure and the foundations of productivity
Infrastructure is not merely a public works programme. It is an essential component of industrial competitiveness.
Physical
The movement of goods, energy and water
Ports and maritime terminals, airports and air freight, railways, roads and highways, inland waterways, industrial parks, warehousing, distribution networks, electricity grids, water supply, wastewater treatment, telecommunications, housing and urban infrastructure.
Digital
The movement of information and control
Broadband networks, fibre connectivity, 5G and future mobile networks, data centres, cloud computing, high-performance computing, trusted digital infrastructure and identity, cybersecurity, digital public services and industrial connectivity.
Infrastructure policy questions
Is infrastructure sufficient for existing demand, and is there capacity for future industrial expansion? Are logistics costs competitive? Can industrial facilities obtain reliable power and water, and can workers reach industrial centres? Is infrastructure interoperable, is investment coordinated across sectors, and are maintenance and lifecycle costs adequately funded?
Infrastructure built without a credible economic rationale can become an expensive liability. Infrastructure planned around credible productive demand can generate substantial positive spillovers.
8. Capital formation and industrial finance
One of the most underestimated aspects of industrial policy is the financial architecture required to develop an industrial economy. A country may have the resources, skills, technology and entrepreneurial potential to develop an industry, but without appropriate capital it may never emerge.
8.1 Different types of capital
| Capital category | Purpose |
|---|---|
| Government expenditure | Infrastructure, research institutions, education and public goods |
| Development finance | Long-term industrial and infrastructure investment |
| Commercial banking | Business lending, working capital and investment |
| Corporate equity | Business expansion and productive investment |
| Venture capital | Early-stage technological and commercial innovation |
| Growth capital | Scaling successful enterprises |
| Private equity | Business transformation, expansion and consolidation |
| Institutional investment | Long-term capital allocation |
| Foreign direct investment | External capital, technology and market access |
| Export finance | Supporting internationally competitive exporters |
| Project finance | Large infrastructure and industrial projects |
| Trade finance | Financing international commercial transactions |
8.2 Development finance institutions
Development banks and other public financial institutions can help address financing gaps where ordinary commercial markets do not adequately support economically valuable projects. Their potential functions include long-term lending, loan guarantees, co-investment, infrastructure finance, technology commercialisation finance, export finance, regional development finance, financing for small and medium-sized enterprises, and support for projects with substantial economic spillovers.
However, public development finance must not become a mechanism for indefinitely supporting commercially unviable enterprises.
8.3 The maturity of national capital markets
A sophisticated industrial economy typically benefits from a range of financing mechanisms rather than relying on one source.
Figure 6
From an idea to an internationally competitive enterprise
Six financing stages that must connect
01
Research funding
Scientific discovery and early technical development.
02
Seed and venture capital
Prototype development and commercial validation.
03
Growth finance
Commercialisation, hiring and initial market expansion.
04
Industrial and project finance
Production facilities, equipment and infrastructure.
05
Corporate and institutional capital
International expansion, acquisitions and scaling.
06
Deep capital markets
Large-scale financing, refinancing and long-term investment.
Why this mattersA country with an underdeveloped financial system may find that its most promising companies are acquired by foreign investors or relocate to obtain capital. Industrial policy should therefore consider not only how enterprises are created, but also how they are financed, retained, scaled and sustained.
Figure 6. The financing ladder: a break at any stage loses the enterprise.
9. Human capital, skills and organisational capabilities
An industrial economy is ultimately built by people and organisations. It is insufficient to establish industrial facilities without developing the workforce capable of operating, maintaining, improving and eventually designing the systems involved.
9.1 The human-capital spectrum
| Category | Capabilities |
|---|---|
| General education | Literacy, numeracy, scientific understanding |
| Vocational education | Practical occupational skills |
| Technical education | Industrial operations and technical maintenance |
| Engineering | Design, systems integration and problem-solving |
| Scientific research | Discovery and technological development |
| Management | Operations, finance, strategy and organisational development |
| Entrepreneurship | Enterprise creation and commercialisation |
| Advanced specialisation | Frontier scientific and technical expertise |
9.2 Institutional infrastructure
9.3 Organisational maturity
A country's industrial capability is not simply the sum of its individual workers' qualifications. It also depends on the maturity of its enterprises: quality management, production planning, operational excellence, supply-chain management, process engineering, financial management, project management, research management, knowledge transfer, corporate governance and technology integration.
A country can have excellent universities but weak industrial capabilities if knowledge cannot move effectively between research, enterprises and markets.
10. Enterprise development and business ecosystem
Industrial policy must address the structure and maturity of domestic enterprises. An economy dominated by very small businesses may struggle to undertake large research programmes, develop internationally competitive products or finance major industrial investments. Equally, an economy dominated by a small number of protected conglomerates may suffer from weak competition and inefficient capital allocation.
| Enterprise category | National economic contribution |
|---|---|
| Micro-enterprises | Local economic activity and entrepreneurship |
| SMEs | Supplier networks, employment and specialised services |
| Mid-sized companies | Industrial scaling and export development |
| Large enterprises | Capital-intensive investment and international expansion |
| Multinational companies | Global market access, technology and investment |
| Start-ups | New technologies and business models |
| Research spin-outs | Commercialisation of scientific discoveries |
| Specialist suppliers | Components, materials and industrial services |
Important policy objectives
Improve SME productivity. Develop domestic supplier networks. Encourage technology adoption. Improve access to finance. Support business internationalisation. Develop management capabilities. Enable successful firms to scale. Encourage competition. Support business succession and ownership continuity. Improve the integration of domestic enterprises into international value chains.
The objective is not to preserve every domestic business. It is to create an environment in which productive enterprises can emerge, grow, compete, innovate and export.
11. Trade policy, exports and international integration
Industrial policy must establish a coherent relationship between domestic production and international markets. A country cannot sustainably develop sophisticated industries if it ignores the realities of international competition.
11.1 Import policy
Imports are not inherently a sign of industrial weakness. They provide access to advanced machinery, industrial equipment, raw materials, components, technology, intermediate goods, specialised services and products that would be uneconomic to produce domestically. Imports can also accelerate domestic industrial development by providing the inputs necessary for more productive downstream activities.
The relevant question is whether imports create productive capabilities or perpetuate avoidable strategic vulnerabilities.
11.2 Export development
Industrial policy should distinguish between exporting commodities, intermediate goods, finished products, services and intellectual property. These activities can generate very different forms of domestic value capture.
11.3 Global value chains
Figure 7
Ten ways to participate in a global value chain
Value capture generally rises down the list
01–02
Raw-material supplier · intermediate processor
Volume-driven activity, exposed to commodity prices and low margins.
03–04
Component manufacturer · assembly centre
Employment-intensive, dependent on imported designs, inputs and equipment.
05–07
Engineering · technology and IP · capital equipment
Knowledge-intensive positions where design authority and rents accumulate.
08–10
Logistics hub · R&D centre · global product owner
Control of flows, standards, brands and markets, with the widest strategic optionality.
ButThe objective should be to move towards more productive and valuable activities where commercially and institutionally feasible. The assumption that every country must move towards domestic ownership of every stage of a value chain is misguided: international specialisation can be economically beneficial.
Figure 7. Position matters more than participation.
11.4 Trade agreements and economic blocs
Industrial policy must account for customs unions, free trade agreements, common markets, rules of origin, product standards, tariffs, non-tariff barriers, export controls, investment agreements, intellectual property agreements, subsidy disciplines and international dispute resolution. For countries participating in major economic blocs, access to a larger integrated market can be a significant industrial advantage.
12. Foreign direct investment and ownership policy
Foreign investment can be an important mechanism for accelerating industrial development. But the volume of foreign investment alone is an inadequate measure of its contribution. Its forms include greenfield investment, acquisitions and mergers, joint ventures, technology partnerships, research partnerships, infrastructure investment, industrial concessions and strategic corporate partnerships.
12.1 Evaluating investment quality
| Criterion | What to assess |
|---|---|
| Capital formation | Does investment create new productive capacity? |
| Technology | Does it introduce valuable technological capabilities? |
| Employment | Does it develop productive and skilled employment? |
| Supplier development | Does it create opportunities for domestic enterprises? |
| Research | Does it establish meaningful local research activity? |
| Exports | Does it improve access to international markets? |
| Tax contribution | Does it generate sustainable public revenue? |
| Knowledge transfer | Does it strengthen domestic capabilities? |
| Resilience | Does it diversify strategically important supply chains? |
| Ownership | Where are the assets, profits, IP and decision-making located? |
Foreign ownership is not automatically undesirable. A foreign-owned enterprise can make substantial contributions to domestic productivity, skills, exports and technological development. Likewise, a domestically owned enterprise is not automatically productive or strategically valuable.
The important distinction is between the location of economic activity and the location of economic control and value capture.
13. Public procurement and market creation
Governments are not merely regulators and financiers. They are also major purchasers of goods and services. Public procurement can help create early markets for technologies and industrial products that might otherwise struggle to achieve commercial scale.
Public procurement can be designed to encourage innovation, competition, quality and lifecycle value rather than simply selecting the lowest initial purchase price. However, procurement must not become disguised protectionism, favouritism or a permanent subsidy to inefficient suppliers.
13.1 Standards and certification
Industrial development also depends on the country's ability to demonstrate that products and services meet recognised requirements: metrology, testing laboratories, product certification, quality assurance, technical standards, accreditation, industrial safety standards, environmental standards and international conformity assessment.
These are often less visible than factories or research centres, but they are essential components of a mature industrial economy.
14. Competition, productivity and market structure
Industrial policy must avoid creating protected economic structures that undermine its own objectives. There is a fundamental tension between supporting domestic capabilities and maintaining competitive markets. A country may initially need to support an emerging industry, but that support should ultimately contribute to stronger productivity and competitiveness.
A national champion that cannot compete without indefinite protection may represent a policy failure rather than an industrial success. This is why competition policy is not separate from industrial policy. It is one of its essential disciplines.
15. Regional and spatial industrial development
Industrial capabilities do not emerge uniformly across national territory. Geography, infrastructure, labour availability, resource endowments, research institutions and existing business clusters influence where industries develop.
The agglomeration effect
When related businesses, suppliers, universities, skilled workers and service providers locate near one another, they can benefit from shared infrastructure, specialised labour markets, knowledge spillovers, supplier proximity, reduced transaction costs, collaboration and increased market depth.
But creating an industrial park does not automatically create an industrial cluster. Clusters emerge from genuine economic relationships and accumulated capabilities, not simply from geographical designation. Regional policy should also consider the risk of excessive economic concentration in one or two metropolitan regions.
16. Environmental sustainability and the industrial transition
Modern industrial policy must account for environmental constraints, climate change and resource efficiency. This is not simply an environmental add-on: energy costs, carbon exposure, water availability, resource security and environmental standards increasingly affect industrial competitiveness.
The challenge is to maintain industrial competitiveness while reducing the environmental costs of economic activity. It also requires realistic sequencing: industries need access to affordable energy, infrastructure and technologies before ambitious environmental requirements can be achieved sustainably.
17. Strategic autonomy, economic security and resilience
This is where industrial policy intersects most directly with national security and foreign policy. A country may have an economically efficient industrial structure while remaining exposed to significant external vulnerabilities. The issue is not necessarily that it imports essential inputs. The issue is whether it can manage a disruption.
17.1 Categories of strategic dependency
| Dependency | Examples |
|---|---|
| Energy | Imported fuels, electricity interconnectors |
| Materials | Critical minerals, refined materials |
| Technology | Semiconductors, industrial software, specialised equipment |
| Infrastructure | Telecommunications, cloud, logistics networks |
| Industrial inputs | Chemicals, components, precision equipment |
| Financial | External financing and international payment infrastructure |
| Knowledge | Foreign intellectual property and specialised expertise |
| Logistics | Shipping routes, ports, transport corridors |
| Food | Imported agricultural inputs and essential food commodities |
17.2 A framework for strategic autonomy
Strategic autonomy does not require complete domestic production. There are several ways to secure essential capabilities.
Figure 8
Ten routes to secure an essential capability
Choose by strategic importance, substitutability and disruption consequence
Design ruleUse the least expensive route that survives a plausible disruption. Domestic production is often the most costly of the ten, and is only warranted where the strategic importance justifies it.
Figure 8. Autonomy is a portfolio of options, not a single policy.
17.3 Resilience versus self-sufficiency
Self-sufficiency
Meeting requirements domestically
The ability to meet requirements through domestic resources and production.
Strategic autonomy
Freedom of decision
The ability to make important economic and policy decisions without unacceptable external constraints.
Resilience
Absorb, maintain, recover
The ability to absorb disruption, maintain essential functions and recover.
Interdependence
Mutual benefit
Mutually beneficial economic relationships that can increase efficiency and create shared interests.
The strongest industrial strategies generally seek a combination of these characteristics rather than maximising domestic production at any cost.
18. Institutions, governance and the state's role
An industrial strategy is only as effective as the institutions responsible for designing, financing, coordinating and executing it. This is particularly important because industrial policy involves numerous ministries, public agencies, regional governments, financial institutions, universities and private enterprises.
18.1 The institutional architecture
| Institution | Principal responsibility |
|---|---|
| National government | Strategic direction and national priorities |
| Finance ministry | Fiscal framework, expenditure and public finance |
| Industry ministry | Industrial strategy and sector development |
| Trade ministry | Trade agreements, exports and market access |
| Energy ministry | Energy security and industrial energy policy |
| Education ministry | Skills and human-capital development |
| Science and technology ministry | Research and innovation |
| Development bank | Long-term productive finance |
| Investment promotion agency | Domestic and foreign investment |
| Competition authority | Market competition |
| Regulatory agencies | Sector-specific rules and oversight |
| Regional governments | Place-based development |
| Universities | Research and skills |
| Private enterprises | Investment, innovation and production |
18.2 Coordination mechanisms
An effective industrial policy architecture needs a national strategic framework, clearly defined institutional mandates, cross-ministerial coordination, sector-specific working groups, public–private consultation, regional implementation arrangements, independent evaluation, transparent reporting and programme-level accountability.
The fragmentation risk
A country might have an ambitious semiconductor strategy, for example, but the industrial, energy, education, research, investment and infrastructure policies may not be aligned. The result can be substantial spending without a coherent industrial outcome.
The OECD's industrial policy work emphasises strategic orientation, coordination, delivery, evaluation and adaptation as interconnected requirements.
19. Industrial policy instruments: how governments actually intervene
The previous sections describe what industrial policy encompasses. This section concerns the mechanisms through which it is implemented. An important distinction is between creating the conditions for productive activity and directly supporting particular activities.
19.1 Horizontal policy instruments
These policies improve the general productive environment.
19.2 Vertical policy instruments
Vertical interventions can be justified where particular industries generate significant spillovers, face coordination failures or have strategic importance. They are not automatically superior to horizontal interventions.
19.3 Supply-side instruments
| Instrument | Function |
|---|---|
| Grants | Finance qualifying investment or research |
| Tax credits | Reduce the cost of eligible activities |
| Subsidised loans | Improve access to capital |
| Loan guarantees | Reduce financing barriers |
| Equity investment | Provide risk-bearing capital |
| Public R&D | Develop scientific and technical knowledge |
| Skills programmes | Develop specialised labour |
| Infrastructure | Provide essential productive inputs |
| Technology transfer | Improve access to technical knowledge |
| Investment incentives | Encourage productive investment |
19.4 Demand-side instruments
These stimulate markets for products and services: public procurement, public infrastructure programmes, innovation procurement, product standards, market-creation programmes, export promotion, public–private demonstration projects, demand aggregation and regulatory frameworks that establish predictable markets.
19.5 Framework instruments
These influence the environment in which industries operate: competition law, trade policy, investment regulation, labour-market institutions, corporate taxation, financial regulation, intellectual property law, environmental regulation, bankruptcy and restructuring law, and product and technical standards.
19.6 State ownership and participation
Governments can also participate directly in productive activities through state-owned enterprises, public–private partnerships, development corporations, public investment funds, strategic infrastructure companies and public research organisations.
State ownership is neither inherently effective nor inherently ineffective. Its success depends on governance, commercial discipline, transparency, political accountability and the clarity of the enterprise's public mandate.
20. The industrial development trajectory
Countries cannot simply select an industrial model independently of their existing capabilities. Industrial development is cumulative: it involves learning, investment, organisational development, technological absorption, institutional maturity and market formation.
20.1 Indicative stages of industrial maturity
| Stage | Characteristic | Typical capabilities |
|---|---|---|
| 1. Resource-based economy | Primarily dependent on natural resources and basic activities | Agriculture, extraction, commodities |
| 2. Basic industrialisation | Establishment of foundational industries | Food processing, construction materials, basic manufacturing |
| 3. Diversified industrialisation | Expansion into multiple industrial sectors | Chemicals, machinery, automotive components |
| 4. Integrated industrial economy | Strong domestic supplier networks | Engineering, industrial equipment, complex supply chains |
| 5. Advanced industrial economy | Sophisticated technological and production capabilities | Automation, advanced materials, complex electronics |
| 6. Innovation-led economy | Significant domestic technology development | Industrial R&D, advanced computing, biotechnology |
| 7. Frontier industrial economy | International leadership in selected technological domains | Frontier research, platform technologies, advanced systems |
These are not formal classifications or inevitable stages. Countries may occupy several stages simultaneously across different sectors. A country may have frontier-level financial services, advanced aerospace engineering, mid-level electronics manufacturing, basic domestic machinery production and heavy dependence on imported energy. A single national industrial maturity score would conceal these differences.
20.2 The importance of industrial foundations
A critical distinction is between possessing advanced industrial facilities and possessing the capabilities to sustain them. Consider a semiconductor fabrication facility: it requires far more than the physical plant.
The facility is one component of a much larger ecosystem. This illustrates why premature leapfrogging is problematic: a country might attempt to establish a highly sophisticated industry before it has developed the supporting capabilities necessary to operate it competitively. The result can be a technologically impressive but economically fragile facility.
20.3 Capability accumulation versus prestige projects
| Capability-building investment | Prestige-oriented investment |
|---|---|
| Addresses an identified economic constraint | Primarily seeks international visibility |
| Develops transferable skills | Relies heavily on external expertise |
| Creates supplier relationships | Depends on imported inputs indefinitely |
| Has a credible market | Relies on political announcements |
| Develops domestic organisational knowledge | Creates limited institutional learning |
| Can become commercially sustainable | Requires indefinite financial support |
| Has measurable productivity objectives | Measures success through expenditure or capacity announcements |
Prestige projects are not necessarily worthless, but they should never substitute for a coherent development strategy.
21. The economics of industrial policy: choosing what to develop
This is arguably the most intellectually demanding part of industrial policy. The question is not simply which industries are attractive. It is which economic activities offer the greatest potential contribution relative to their opportunity costs and implementation requirements.
21.1 The case for intervention
| Market failure or constraint | Explanation | Potential response |
|---|---|---|
| Coordination failure | Investment in one industry depends on investment in others | Coordinated infrastructure and investment |
| Knowledge spillovers | Innovators cannot capture all the benefits of their research | Research support |
| Learning externalities | Early producers generate knowledge that benefits others | Time-limited development support |
| Capital-market failure | Long-term productive projects cannot obtain suitable finance | Development finance |
| Information asymmetry | Firms lack information about export markets or suppliers | Market intelligence and support |
| Public-good provision | Infrastructure and research facilities benefit many enterprises | Public investment |
| Strategic vulnerability | Disruption creates costs beyond those borne by individual firms | Resilience investment |
| Environmental externalities | Market prices fail to reflect environmental costs | Regulation and incentives |
Not every industrial weakness is a market failure. Some are the consequence of poor management, inadequate skills, weak competition, unfavourable economics or unsuitable regulation. The diagnosis must come before the intervention.
21.2 The opportunity-cost test
Every industrial intervention uses resources that could have been deployed elsewhere. A government deciding to subsidise an advanced industrial project is implicitly deciding not to spend the same money on other priorities.
A credible assessment must ask
What is the expected economic return? What additional investment will the intervention generate? Would the investment have happened anyway? What are the employment and productivity effects? How much public finance is at risk? What are the alternative uses of the resources? What happens if the project fails, and what happens if it succeeds? Can the activity become competitive without continuing support?
21.3 Economic complexity and productive capabilities
A useful complementary perspective is economic complexity. The central idea is that countries differ not only in what they produce, but in the diversity and sophistication of the productive knowledge embedded in their economies. A country producing a wide range of sophisticated products generally has accumulated capabilities that can be reused in other activities.
Example
Precision engineering capabilities can contribute to
Medical equipment · aerospace components · industrial machinery · scientific instruments · advanced manufacturing.
Example
Chemical engineering capabilities can contribute to
Pharmaceuticals · speciality chemicals · advanced materials · industrial biotechnology · energy technologies.
This suggests an important principle: industrial diversification should build on related capabilities wherever possible, rather than assuming that the most technologically impressive new industry is necessarily the best next investment.
21.4 Related diversification
Figure 9
A grounded way to choose the next industry
Five steps, starting from what already exists
01
Existing competitive activities
What already earns money in international markets?
02
Capabilities embedded in those activities
Skills, process knowledge, suppliers, standards, engineering depth.
03
Related industries that reuse those capabilities
Adjacency rather than aspiration.
04
Missing capabilities to be developed
Named, costed and sequenced, not assumed.
05
Markets where the capability can be viable
Demand, competition, price and access — tested before committing.
WhyThis is a more grounded approach than selecting industries purely because they are fashionable or associated with technological prestige.
Figure 9. Related diversification as the default route to new capability.
22. National industrial positioning: different countries, different strategies
There is no single optimal industrial policy. A country's appropriate strategy depends on its economic scale, geography, capabilities, resources, institutional quality, fiscal capacity and international position. The following archetypes illustrate different approaches.
Figure 10
Seven strategic archetypes
Illustrative positions, not rankings
01 · Taiwan
Advanced technological specialist
Deep specialisation, advanced engineering, technology leadership, critical supply-chain positioning and international market integration.
02 · South Korea
Export-oriented industrial powerhouse
Large industrial enterprises, export competitiveness, technology development, engineering, supplier ecosystems and international scale.
03 · Germany
Advanced engineering and ecosystem
Engineering, industrial machinery, specialised manufacturing, vocational education, research and integrated supply chains.
04 · Singapore
Global economic and logistics hub
Trade, finance, logistics, advanced services, strategic infrastructure, multinational investment and selected high-value industries.
05 · India
Large diversified developing economy
Domestic market development, infrastructure, diversification, services, technology adoption, manufacturing and skills.
06 · Brazil
Resource-rich diversified economy
Resource value chains, agribusiness, energy, industrial diversification, infrastructure and technological upgrading.
07 · Netherlands
Small, highly integrated advanced economy
Specialised technologies, international trade, logistics, advanced agriculture, engineering and regional market integration.
Figure 10. The important lesson: national strategies should reflect comparative advantages while actively developing new capabilities.
23. Industrial policy and international standing
Industrial strength influences a country's international position in ways that extend beyond export earnings. It can affect diplomatic leverage, negotiating power, technology partnerships, investment attractiveness, access to strategic markets, influence over technical standards, participation in international research, supply-chain importance, economic resilience and the ability to support regional economic development.
A country that controls an internationally important technological capability may possess influence disproportionate to its population or GDP. Similarly, a country that provides indispensable industrial inputs may have considerable negotiating power. However, economic influence is not the same as coercive power. Durable international standing is more likely to arise from being a reliable, capable and valuable economic partner.
23.1 Industrial policy as economic diplomacy
Foreign policy and industrial policy should therefore be coordinated. Examples include negotiating technology partnerships, securing diversified access to critical materials, establishing cross-border research programmes, attracting internationally significant investment, participating in regional infrastructure initiatives, building mutually beneficial industrial supply chains, contributing to international technical standards and developing strategic economic partnerships.
24. Measuring industrial policy success
An industrial policy should not be evaluated by announcements, subsidies distributed, factories inaugurated or nominal investment commitments alone. The ultimate test is whether it improves the country's productive and strategic position.
24.1 National-level indicators
| Dimension | Potential indicators |
|---|---|
| Economic growth | GDP, GDP per capita, real income |
| Productivity | Labour productivity, total factor productivity |
| Industrial structure | Sectoral value added, diversification |
| Investment | Gross fixed capital formation |
| Exports | Export value, complexity and diversification |
| Technology | R&D expenditure, patents, technology commercialisation |
| Human capital | Technical qualifications, skills, engineering workforce |
| Finance | Domestic investment, capital-market depth |
| Energy | Reliability, affordability, import dependence |
| Resilience | Critical input concentration, alternative suppliers |
| Fiscal strength | Public debt sustainability, tax revenue |
| Regional development | Employment, productivity and income distribution |
| Environmental performance | Emissions intensity, energy and material efficiency |
| International standing | Market access, investment partnerships, standards participation |
24.2 Enterprise-level indicators
24.3 Programme-level indicators
Every public industrial intervention should have its own performance framework. For example, a government grant programme supporting industrial automation might measure additional investment generated, number of enterprises adopting technology, productivity improvements, workforce training, reduced production costs, new products developed, export growth and continued operation after public support ends.
Additionality
One particularly important concept is additionality. It asks whether public intervention produces an outcome that would not otherwise have occurred.
If a government subsidises a factory that a company would have built anyway, the additional economic benefit may be limited. If public support enables an otherwise commercially impossible research programme that generates substantial knowledge spillovers, the additional benefit may be much greater. The distinction matters when assessing value for money.
25. Common industrial policy failures
Industrial policy can generate substantial economic benefits, but it can also produce serious failures. These failures are frequently institutional and political rather than purely economic.
| Failure | Description | Consequence |
|---|---|---|
| Premature leapfrogging | Attempting advanced industries without foundational capabilities | Expensive, unsustainable projects |
| Prestige industrialisation | Pursuing visible projects rather than productive capabilities | Misallocated resources |
| Permanent protection | Supporting industries without productivity requirements | Inefficiency and weak competition |
| Subsidy dependency | Enterprises become dependent on public support | Fiscal burden |
| Political capture | Businesses influence policy for private benefit | Rent-seeking and corruption |
| Poor sector selection | Misunderstanding market demand and competitive conditions | Failed investment |
| Institutional fragmentation | Ministries and agencies pursue conflicting objectives | Ineffective implementation |
| Skills mismatch | Industrial ambitions exceed workforce capabilities | Underutilised investment |
| Financial misallocation | Capital flows to politically attractive rather than productive activities | Lower productivity |
| Infrastructure mismatch | Facilities are built without sufficient demand | Underutilised infrastructure |
| Excessive protectionism | Domestic markets become isolated from competition | Reduced competitiveness |
| Technological dependency | Advanced facilities rely indefinitely on external expertise | Limited domestic capability |
| Fiscal overextension | Industrial commitments exceed public financial capacity | Macroeconomic instability |
| Policy discontinuity | Long-term programmes change with political cycles | Investment uncertainty |
| Excessive diversification | Too many industries are targeted simultaneously | Resources become diluted |
25.1 The fundamental governance problem
Industrial policy requires governments to make decisions under uncertainty. They must identify opportunities, allocate resources, coordinate institutions and support investment without necessarily knowing which activities will ultimately succeed. This creates an inherent governance challenge.
The World Bank's industrial policy framework places particular emphasis on government capacity, market size, fiscal space and enabling institutions, and stresses the need to distinguish productive support from poorly designed interventions. The IMF similarly highlights the potential economic benefits alongside fiscal costs, uneven results and international spillovers.
26. Sequencing industrial policy: what comes first?
One of the most important questions is how to sequence industrial development. Not every country can pursue every industrial objective simultaneously. A coherent strategy must establish dependencies between investments.
Figure 11
An indicative industrial development sequence
Dependencies, not a rigid ladder
01
Macroeconomic and institutional foundations
Political stability, rule of law, public administration, fiscal sustainability and credible economic policy.
02
Foundational infrastructure
Energy, transport, water, telecommunications and logistics.
03
Human capital and productive institutions
Education, vocational skills, engineering, research, standards and technical training.
04
Basic productive capabilities
Agriculture, processing, materials, construction inputs, maintenance and basic manufacturing.
05
Enterprise and financial development
Supplier networks, domestic businesses, commercial finance, investment and exports.
06
Industrial diversification and upgrading
More sophisticated engineering, chemicals, machinery, electronics and industrial services.
07
Advanced technology and innovation
Advanced materials, semiconductors, biotechnology, automation and frontier research.
08
International leadership and strategic positioning
Globally competitive technologies, intellectual property, international standards and high-value supply-chain positions.
ImportantThis is an indicative dependency model, not a rigid linear development path. Many activities can and should progress concurrently where supporting conditions permit.
Figure 11. Sequence establishes dependencies; it does not forbid parallel progress.
26.1 The foundations-first principle
A useful rule is: do not confuse the desired destination with the next feasible step. A country aspiring to become a semiconductor leader might first need to develop electronics engineering, industrial chemicals, precision manufacturing, power infrastructure, materials science, technical education, industrial research, capital markets and international technology partnerships.
These capabilities may themselves create substantial economic value. They also create options for future technological advancement.
26.2 The parallel-development principle
Foundations-first does not mean postponing all advanced technology investment until an economy is fully industrialised. That would be equally problematic. Countries can pursue advanced research, digital infrastructure, technology adoption and specialised industrial development while strengthening their foundational economy.
The distinction
Between investing in advanced capabilities that are achievable and strategically useful, and attempting to create entire industrial ecosystems without the necessary economic, institutional and technical foundations.
27. An integrated national industrial policy design framework
Bringing everything together, a national industrial strategy could be constructed through twelve analytical workstreams.
| Workstream | Core question | Principal output |
|---|---|---|
| 1. National diagnosis | Where does the country stand? | Baseline assessment |
| 2. Strategic objectives | What national outcomes are required? | National industrial objectives |
| 3. Economic structure | Which sectors and activities matter? | Industrial structure analysis |
| 4. Capability assessment | What can the country actually do? | Capability and value-chain map |
| 5. International positioning | Where does it fit globally? | Trade and geopolitical assessment |
| 6. Strategic dependencies | What vulnerabilities need addressing? | Economic security assessment |
| 7. Financial architecture | What can the country afford and finance? | Capital and investment strategy |
| 8. Human capital | What skills and institutions are missing? | Workforce and education strategy |
| 9. Policy instruments | What interventions are appropriate? | Policy instrument portfolio |
| 10. Institutional architecture | Who is responsible for delivery? | Governance framework |
| 11. Implementation | In what sequence and timeframe? | Delivery roadmap |
| 12. Evaluation | Is the strategy producing results? | Performance and adaptation framework |
27.1 The national diagnostic: questions that must be answered
Economic reality
What are the country's existing sources of wealth? Which sectors generate productivity and exports? Where is value added? Which activities have internationally competitive enterprises? Which sectors are structurally unproductive?
Industrial reality
What can the country design, manufacture, process, maintain and research? Which capabilities are missing?
Financial reality
How much investment can the economy mobilise? What can public finances support? Is long-term domestic finance available? Which investments require foreign capital?
Political and institutional reality
Can the state execute complex programmes? Are regulatory institutions effective? Can policy survive political transitions? Are corruption and political capture sufficiently controlled?
International reality
Which markets are accessible? Which partnerships are available? Where does the country have comparative advantages? Which dependencies are dangerous? What geopolitical constraints exist?
Future reality
Which technologies are likely to reshape the economy? Which industries will expand or contract? Which existing capabilities could become more valuable? What demographic and environmental changes must be anticipated?
28. The ultimate conceptual framework: what makes a strong industrial nation?
Industrial strength is multidimensional. It is not adequately represented by manufacturing output, industrial employment or the number of factories. A more complete assessment considers eight overarching dimensions.
Figure 12
The eight pillars of national industrial strength
Capabilities that must work together
01
Productive capacity
The ability to produce, process, engineer, manufacture, maintain and deliver goods and services.
02
Technological capability
The ability to adopt, absorb, adapt, develop and commercialise technology.
03
Financial capacity
The ability to mobilise, allocate and sustain capital for productive investment.
04
Human and organisational capital
Skills, knowledge, management and institutional expertise.
05
Ecosystem integration
The strength of suppliers, infrastructure, markets, research institutions and international networks.
06
International competitiveness
The ability to compete, export, attract investment and participate in value chains.
07
Strategic resilience
The ability to withstand dependencies, disruptions and geopolitical or economic shocks.
08
State and institutional capability
The ability to formulate, coordinate, finance, implement, regulate and improve policy.
Figure 12. Eight pillars; none of them is manufacturing output.
28.1 The relationship between the eight pillars
These dimensions reinforce one another.
The strength of an industrial economy is determined not only by the individual capabilities it possesses, but also by how effectively those capabilities work together.
29. A particularly important distinction: industrial policy versus national economic strategy
| Level | Principal question | Scope |
|---|---|---|
| National economic strategy | What kind of economy and national prosperity do we want? | Entire economic model |
| Industrial policy | What productive capabilities and economic activities must we develop? | Productive structure and capabilities |
| Industrial programmes | What specific interventions will develop those capabilities? | Projects, investments and instruments |
Worked example
National economic strategy: develop a high-income, technologically sophisticated, internationally competitive and resilient economy.
Industrial policy: develop competitive capabilities in advanced engineering, energy systems, materials science, digital infrastructure and specialised industrial production.
Industrial programmes: develop engineering education, improve electricity infrastructure, support research commercialisation, attract specialist investment and expand industrial supplier capabilities.
This hierarchy helps prevent industrial policy from becoming a disconnected collection of subsidies, announcements and sectoral initiatives.
30. Reference frameworks and further intellectual foundations
| Institution / framework | Contribution |
|---|---|
| OECD – Industrial Policy Handbook | Strategy design, governance, coordination, implementation and evaluation |
| World Bank – Industrial Policy for Development | Development-oriented industrial policy, instruments and country constraints |
| UNIDO – Industrial Development Reports | Structural transformation, sustainable industrialisation and productive capabilities |
| IMF – Industrial Policy research | Macroeconomic implications, fiscal costs, spillovers and trade-offs |
| UNCTAD – Trade and Development Reports | Trade, development, investment and structural transformation |
| European Commission – Industrial Strategy | Competitiveness, strategic dependencies and single-market policy |
Useful starting publications
- OECD – Industrial Policy Handbook (2026)
- World Bank – Industrial Policy for Development
- UNIDO – Industrial Development Report 2026
- IMF – Industrial Policies: Handle with Care
- OECD – An Institutional Framework for Industrial Strategies
- OECD – An Industrial Policy Framework for OECD Countries
31. Final synthesis
Industrial policy should ultimately be understood as a national capability-building and economic positioning exercise.
Its purpose is not to maximise manufacturing, subsidise selected companies, or pursue the latest technological trend. It is to develop an economy that can:
A strong industrial nation is not necessarily one that produces everything. It is one that understands what it must be capable of producing, designing, developing, financing, operating, maintaining and securing — and has the economic, financial, technological, human and institutional capacity to do so.
This is the distinction between an industrialisation programme and a comprehensive national industrial strategy.
Suggested next analytical layer
The natural continuation is to turn this conceptual framework into a structured National Industrial Capability and Maturity Assessment. That would connect this discussion with the earlier idea of national industrial and technological milestones, but assess them through a much broader framework.
Next layer
Assessing how capable an economy actually is
Eight axes of a national capability and maturity assessment
01
National foundations
Economic, financial, political, institutional and demographic maturity.
02
Industrial foundations
Energy, materials, infrastructure, logistics and capital equipment.
03
Industrial capabilities
What the country can operate, maintain, engineer, design and produce.
04
Technological maturity
Technology adoption through to frontier innovation.
05
Financial maturity
Capital markets, development finance and investment capacity.
06
International positioning
Exports, value chains, strategic partnerships and dependencies.
07
Resilience and autonomy
Essential capabilities, substitutability and external vulnerability.
08
National outcomes
Productivity, prosperity, competitiveness, fiscal strength and international influence.
The resultA framework for assessing not merely whether a country is industrialised, but how sophisticated, integrated, productive, financially sustainable and strategically capable its entire national economy actually is.
Figure 13. From a conceptual framework to an assessment instrument.