Heterodox Approaches to Industrial Policy and the Implications for Industrial Hubs

Industrial policy may be back in vogue, but with fundamental fissures remaining between different conceptions of industrial policy, there is no consensus. We emphasize this by focusing particularly on structuralist rationalizations for industrial policy. These give a special sector- or product-specific role to manufacturing as an engine of growth. While premature deindustrialization is widespread, it is not unavoidable. One factor widening the scope of industrial policy is the increasing breadth of productive activities that are industrial in nature. We draw out the implications, particularly of structuralist development economics, but also of the blurring of boundaries between sectors, for the gains from industrial hubs. Hubs can potentially deepen the growth-pulling role of manufacturing and cognate activities, thus contributing to industrialization and growth. This, however, requires policy that supports hubs to catalyse dynamic processes of structural change, rather than creating enclaves or merely leading to static gains.