Green Industrial Policy in Emerging Countries

For decades, governments have tried to foster industrial competitiveness and economic growth. Many instruments are known to work, and many lessons have been learned. However, humanity increasingly feels the effects of natural resources depletion. The rate of this depletion is deeply unsustainable, and it is – as of yet – inextricably linked to economic growth and development. To preserve acceptable living conditions for future generations, while at the same time creating these conditions for millions of poor in the first place, we have to achieve a de-linking of economic activity and resource depletion.

It would be a logical step to make use of the lessons learned in industrial policy and transfer them to the new and most formidable task of steering industries towards a lower environmental impact. The market fails to protect the environment, so governments need to intervene. This intervention, however, needs to be much stronger than the agreed principles of ‘traditional’ industrial policy suggest. Otherwise, it will not be possible to achieve the radical change required within the short period of

time left. Heavy government intervention, however, risks misallocation and rent-seeking.

Hence, a balance is required and in this groundbreaking new book, the authors analyse the possibilities in four major developing countries – China, India, Egypt and South Africa – with particular emphasis on the energy sector as a case study.