World Bank warns against blunt industrial policy tools
A World Bank report warns that developing nations rely too heavily on blunt tools like tariffs. It suggests shifting toward targeted investments in skills.
Developing nations are pursuing industrial policy with greater intensity than wealthy economies, yet many are relying on blunt tools such as tariffs and subsidies that are unlikely to achieve desired results, according to a new report from the World Bank. The findings highlight a significant shift in global economic strategy as governments increasingly intervene to shape production rather than leaving outcomes solely to market forces.
World Bank Chief Economist Indermit Gill noted that last year, 80% of the organization's country economists reported that client governments sought advice on implementing industrial policy. This marks a departure from the institution's stance three decades ago, which often dismissed such interventions as costly failures.
