Policy Papers

Industrial Policy Coverage in IMF Surveillance— Broad Considerations

Publication Date:

March 11, 2024

Electronic Access:

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Summary:

The paper aims to provide a conceptual framework and guiding principles for the coverage of Industrial Policy (IP) in IMF surveillance. It proposes a working definition of industrial policy, discusses its objectives and main instruments, and provides a brief review of academic literature on IP. The paper discusses the four broad sets of considerations for assessing IP: justification, design, cost-benefit assessment, and implementation. It stresses that IP should be covered in IMF surveillance when it is deemed macro-critical and/or has the potential to generate significant cross-border spillovers. The paper also discusses specific aspects of industrial policies, including trade-related IP, green IP, Special Economic Zones (SEZs), and State-Owned Enterprises (SOEs), and provides examples of the IP coverage in the Article IV consultations with China, Euro Area, Indonesia, Saudi Arabia, and the United States.

Series:

Policy Paper No. 2024/008

Subject:

Balance of payments Financial sector policy and analysis Institutional View on capital flows International trade Monetary policy Political economy Special economic zones Spillovers Tax incentives Taxes Trade policy

Frequency:

occasional