Effectiveness of industrial policies in New Caledonia

New Caledonia is an archipelago located in the South Pacific. It is a former French colony that has acquired political autonomy over the period 1988 to 1998 but remains under the French jurisdiction. Over the past twenty years, the local government has worked towards diversifying the economy of the archipelago and has to this end implemented a set of import-substitution policies consisting of three industrial policies implemented at the province level, and trade policies implemented at the ‘country’ level. In this paper, I analyse the effectiveness of these industrial policies which are of particular interest because sufficient data has been collected to evaluate their effectiveness. The analysis is in two parts. In the first part of the analysis, I use policy recommendations from Hausmann and Rodrik (2003) and Hausmann and Hidalgo (2011) as a benchmark and search the legal documents that institute the aforementioned province-level policies for desirable and undesirable design features which may later explain the effectiveness of the policies or lack thereof. The effectiveness of the policies is formally assessed in the second part of the analysis. I use the data collected on the allocation of subsidies to evaluate their effects on the economic complexity of New Caledonia, and their effects on GDP per capita