IISD Trade and Sustainability Review, December 2025
Industrial Policies
This edition of the IISD Trade and Sustainability Review highlights five distinct and often underexplored dimensions of industrial policy. The authors consider industrial policies in service-driven economies, the interplay between emerging green industrial strategies and agriculture, the effects of digitalization on inclusive development in Kenya, the challenges and necessary policy shifts in Nepal’s textiles and garments sector, and how the process of designing industrial policies influences their effectiveness. Together, these perspectives shed light on overlooked aspects of industrial policy and fill important knowledge gaps.
Read previous issues of the Trade and Sustainability Review here.
Introduction
Industrial policy is back—again—but this time it looks nothing like the playbooks of the past. Around the world, governments are trying to steer economies through a turbulent mix of digital disruption, green transitions, shifting labour markets, and new geopolitical pressures. But while industrial policy has returned to the centre of debate, much of the conversation still focuses on the policies of manufacturing powerhouses and high-tech giants. In this issue of the Trade and Sustainability Review, we step outside that frame. We explore what industrial policy looks like in sectors beyond manufacturing; in economies where services dominate, where digitalization is advancing faster than regulation, where agriculture remains the backbone of livelihoods, and where least developed countries are navigating global competition and limits all at once.
The five contributions in this edition unpack the “how” of industrial policy as much as the “what.” Pierre Sauvé opens by challenging the manufacturing-first mindset, showing why services—now the bloodstream of the global economy—need a different approach to industrial policy thinking. Kitrhona Cerri and Maria Mexi take us into Kenya’s booming digital economy, asking whether digitalization will generate real domestic value or entrench new forms of dependency without stronger governance and worker protections. David Laborde draws lessons from agriculture’s long history of intervention, offering timely insights into how emerging green industrial strategies will reshape food systems and rural development. From Nepal, Paras Kharel, Kshitiz Dahal, and Dikshya Singh examine the future of its textiles and garments sector as the country prepares to graduate from least developed country status, identifying the importance of government policy if industries are to stay competitive in a tougher global market. Finally, David Luke and Hana AlWakeel turn the spotlight on process; looking at how industrial policy is designed, who shapes it, and why the politics of policy-making can be as decisive as the policies themselves.
Together, these articles offer a different, nuanced, and timely look at industrial policy at a moment when the world is considering rewriting its economic rules. They invite readers to look beyond headline-grabbing subsidies and megaprojects and instead examine the systems, sectors, and politics that will determine whether industrial policy delivers inclusive and sustainable development.
Happy reading,
Maria Barral
Articles
Rethinking Industrial Policy for the Services Economy
Pierre Sauvé explores what industrial policy looks like in a services-driven economy, highlighting the need for policies that create the conditions for services to flourish and drive growth across the entire economy.
Read article here.
Digital Dividends or Dependency? Industrial policy in the age of digital economies
Drawing on Kenya’s digital economy, Kitrhona Cerri and Maria Mexi argue that without stronger data governance, labour protections, and mechanisms for domestic value capture, digitalization could lead to dependency rather than supporting inclusive industrial development.
Read article here.
Agriculture and the Green Transition: Impacts of new industrial policies
David Laborde examines how industrial policy can draw on agriculture’s long history of state intervention and how emerging green industrial strategies are poised to reshape agriculture in return.
Read article here.
Nepal’s Textiles and Clothing Exports: Trials, triumphs, and the road ahead
As Nepal approaches graduation from least-developed country status, Paras Kharel, Kshitiz Dahal, and Dikshya Singh explore the challenges facing the country’s textiles and clothing sector and outline the policy shifts needed to preserve its competitiveness.
Read article here.
Why Industrial Policy-making Is the Key to Unlocking Gains from Industrial Policy
Prof. David Luke and Hana AlWakeel argue that unlocking the gains of industrial policy depends on strengthening policy-making capacity, making it more adaptive, consultative, and transboundary—specifically in Africa.
Read article here.
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