IMF Working Papers

Call of Duty: Industrial Policy for the Post-Oil Era

Author/Editor:

Reda Cherif ; Fuad Hasanov ; Madi Sarsenbayev

Publication Date:

March 29, 2024

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

Oil-exporting economies face the risk of an acceleration in the energy transition. A risk-based approach calls for urgent preparation for the post-oil era by diversifying exports and transforming the prevailing growth model. We outline the principles of industrial policy to achieve this objective based on the experience of the Asian Miracles and propose a sketch of the strategy required to transform these principles into practice. The key component of the strategy is to select sectors along two dimensions—proximity to the current production structure or capabilities set and a timeframe for results to materialize. The three strategies—snail crawl, leapfrogging, and moonshots—determine how far from the current production structure the selected sectors are. These sectors need to show results both in the short run to jumpstart growth and ensure policy continuity—“quick wins”—and the long run to create a new growth model—“transformative gains.” We argue that the strategy should focus on supporting the exports of sophisticated sectors in both manufacturing and services while capitalizing on complex tasks and activities in existing industries but should leave non-sophisticated sectors such as tourism and non-tradable services to the private sector.

Series:

Working Paper No. 2024/074

Subject:

Exports International trade Oil exports Oil prices Prices

Frequency:

regular