Industrial policy and sustainable human development: theories, analytical frameworks and real-world practices

Abstract

As almost the whole world is currently living in the waves of the most dramatic global public health emergency of our time and the consequent economic, social and human crisis touching all key dimensions of our lives, there is a historic and real opportunity to encourage a transformative resilience and a new directionality for the path of structural change of our economies and societies (Di Tommaso, 2020), in order to pursue the goal of human flourishing and shared prosperity for all (UN, 2015). In particular, the Covid19 pandemic seems offering an opportunity not simply to appreciate the constructive role of public action to keep all people, households and businesses afloat (UN, 2020), but rather more profoundly to rethink and propose a new and different framing to structure government intervention properly to serve the public interest and guide societal development on the desirable path. In this regard, industrial policy can be considered a central pillar of the recovery strategies, in light also of the momentum gained in the academic and policy-making debate (Cimoli et al., 2009; Bailey et al., 2015; Aiginger and Rodrik, 2020; Chang and Andreoni, 2020; Di Tommaso et al., 2020; Oqubay et al., 2020) about its role in, on the one side, dealing with the prolonged international crisis and the ensuing Great Recession in Western countries and, on the other side, leading the process of industrialization, economic growth and poverty reduction in several emerging countries. Such reliance on industrial policy lies also in the growing appreciation of its relevance and pertinence to promote and govern a desired structural change of the economy (Bianchi and Labory, 2006, 2011; Chang, 1994; Di Tommaso et al., 2013, Stiglitz and Lin, 2013), by reshaping the industrial structure and the organisational configurations of the production systems, thus setting the economy towards a specific path of structural transformation. All in all, industrial policy is increasingly conceived as a vehicle to achieve broader societal goals of nations or regions (Di Tommaso and Schweitzer, 2013) for the sake of long-run collective interest (Aiginger and Rodrik, 2020), placing on centre stage the societal development vision underlying its design and implementation and the sustainability of structural change (Di Tommaso et al., 2020). Despite these premises, two gaps still appear to affect the current debate on industrial policy. Firstly, while new analytical frameworks and empirical analysis have been advanced to link industrial policy to ecological parameters, the ones focusing on a more integrated notion of sustainable human development do not seem to have yet reached the same level of sophistication and comprehensive coverage. Secondly, the theoretical foundations of industrial policies are not fully able to capture and explain the variety of real government intervention models on production dynamics driven by societal goals at national and local level. Thus, there is wide and increasing dissatisfaction with the relationship between theory and practice on industrial policy, due in particular the inability of established theory to go beyond the simple correction of certain market failures in explaining the reason for a wide range of interventions of our present. What is still needed is a holistic policy-making approach able to design robust industrial policy for the simultaneous expansion of collective productive capabilities, creation of good quality jobs and socially sustainable structural change, both at national and local level. Taking together these gaps in the long-lasting literature on industrial policy, the general objective of this collection of papers is to explore why and how national and local governments can shape the future of their societies by promoting industrial policy (within the boundaries of their spheres of intervention) able to simultaneously favour a structural transformation of their economy and increase social progress and collective well-being. In particular, this collection of papers deals with three specific research questions: First, what is the theoretical nexus between the debate on industrial policy and its effects in terms of sustainable human development? Second, how can we measure national development performances keeping into account an integrated notion of the sustainability? Third, how can industrial policy be designed and implemented by national and local governments as a leverage to steer the structural change of the economy and the society? All in all, providing preliminary answers to these research questions should be conceived as an impulse to rethinking the theoretical foundations of industrial policy, as well as its design and implementation processes, for a new role in the Covid19 era. In order to deal with these questions, the research design underlying this collection of papers primarily combines a strong focus on theoretical advancements and new analytical frameworks with a case-study design, leveraging on the mutual engagement between theory and practice of industrial policy keeping and them tied to each other according to real-world conditions.