The paper is focused on the role of finance in the context of the implementation of industrial along the lines of industrial strategy. It argues that there is not a shortage of savings for the funding of investment, and that attention should focus on the direction of savings in ways compatible with development and sustainability. An underlying theme paper is that the financial sector has to serve the economy and industry, rather than vice versa. The financial sector should be re-structured in ways which are conducive to sustainable development. This would involve focusing activities of the financial sector on commercial banking, promotion of a financial sector less prone to financial instability, and direction of funds. A well-designed financial transaction tax along with other taxes on the financial sector would aid focusing the financial sector onto commercial banking activities. The promotion of a more diverse (e.g. in forms of ownership) and regional based banking system could contribute to stability. A combination of ‘directed lending’ with requirements that a stated proportion of bank lending be directed towards specified areas such as ‘green investment’, small and medium sized enterprises, and the birth of a State development bank are advocated.
