IMF Working Papers

Production Network Features of Industrial Policy

By Vanya Georgieva

January 17, 2025

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Format: Chicago

Vanya Georgieva. "Production Network Features of Industrial Policy", IMF Working Papers 2025, 023 (2025), accessed April 18, 2025, https://doi.org/10.5089/9798400296413.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Industrial policy has gained popularity in recent years and across all regions and income levels. Consequently, it is increasingly important to understand how governments choose the sectors they target. This analysis explores the role of domestic production networks in sector targeting, while controlling for other sector and global value chain characteristics. Combining datasets on industrial policy (Global Trade Alert) and input-output linkages (ICIO, OECD) provides novel insight into the network features of industrial policy. In particular, a sector’s ‘centrality’—i.e., its degree of connectedness - within the domestic production network is an important and significant predictor of sector intervention. The results indicate that industrial policy is used differently across regions, income groups, time periods, and types of policy tools. Notably, emerging economies tend to target more central sectors, while advanced economies target less central ones, on average. However, there has been a global shift toward more central sectors over time. Lastly, subsidies are deployed on more central sectors, while tariffs are used on less central ones.

Subject: Emerging and frontier financial markets, Export restrictions, Exports, Financial markets, Income, International trade, National accounts

Keywords: Advanced economy, Asia and Pacific, Country-sector control variables, Emerging and frontier financial markets, Europe, Export restrictions, Exports, Global, Global Value Chains, Import tariff result, Income, Industrial Policy, Input-output linkage, Middle East and Central Asia, Production network feature, Production Networks, Sector intervention, Spillovers, Standard deviation, Subsidies, Trade Policy

Publication Details

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