Can industrial policy spur national resilience?

The Sustainable Trade Index’s 72 data points or "indicators" ­are structured into three "pillars" of sustainability: economic growth, societal advancement, and environmental stewardship. Together, they measure how 30 economies globally balance their ability to conduct trade with prudent societal and environmental policies.

Many of the STI’s indicators drill down into industrial policy-related spheres such as state policies, subsidies, direct grants, and land concessions, including indicators on tariff and non-tariff barriers, investment freedom, and country credit ratings. Achieving balanced outcomes between the three pillars is essential for economic resilience, as highlighted in the 2024 STI report: The race for resilience.

Speakers

The panel of speakers were:

• Christos Cabolis, Chief Economist at the IMD World Competitiveness Center
• Simon Evenett, Professor of Geopolitics and Strategy at IMD
• Deborah Elms, Head of Trade Policy at the Hinrich Foundation

The event was moderated by Chuin Wei Yap, Program Director of International Trade Research at the Hinrich Foundation.

Watch the webinar:

Webinar highlights

1. A growing alignment between industrial policy and resilience
   The roll-out of industrial policy has vastly accelerated in the last ten years. At the end of 2023, approximately 2,500 new industrial policy measures had been taken with more than two thirds of which were trade distorting, according to IMF figures. Advanced economies accounted for the lion’s share, a trend that’s been accelerating since 2010.
   
   Christos Cabolis emphasized the growing alignment between industrial policy and resilience, noting that "environmental resilience in terms of climate change – specifically, transitioning to green energy – requires foresight from both public and business decision-makers."
2. Learning lessons from the past
   Simon Evenett highlighted the importance of learning from historical industrial policies. He suggested that governments need to conduct root cause analyses to understand the problems and to set clear targets to define what constitutes success in industrial policy outcomes.
3. Identifying trade-offs
   Deborah Elms pointed out the necessity of recognizing trade-offs when implementing industrial policies. She stated, "We might make ourselves so busy stockpiling certain goods that we neglect others, which underscores the importance of having comprehensive data to guide policy decisions."
   
4. Subsidies and overcapacity
   The panel also addressed the issue of subsidies and overcapacity. Panelists noted that it is important to have the data before designing policy solutions and that some of such measurements are captured in the STI.
   

For a more comprehensive understanding of the findings and data from the Hinrich-IMD Sustainable Trade Index, download the STI 2024 report.

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