New industrial policy and the extractive industries

Industrial policy is back. Advocates for industrial policy argue that the important question is not whether such policies should be applied at all, but how to design and implement them. For the extractive industries this development poses a challenge. First, there is the argument that host countries should reduce their dependence on the extractive resources sector and diversify their economies. But there is little consensus over how countries should go about this. Second, there is the universal climate agreement reached at the Paris COP21 in November 2015 which mandates that all economies have to move towards more sustainable and resource-efficient growth, with (green) industrial policy playing a critical part in achieving this structural transformation. Third, the liberal capitalist system underpinning the current global economy is under pressure with some political forces now making the case for more inward-looking economic policies and protectionism. This paper explores the new debate on industrial policy in relation to the extractive industries and the extractives-led development agenda.