Industrial Policy and the WTO

Abstract

This paper reviews the objectives and instruments of industrial policy in a changing global context and multilateral rules and discipline. The authors provide an analytical review of the objective and justification for industrial policy pursued by countries. The importance of having an analytical framework is that it becomes the benchmark against which objectives, instruments and outcomes can be measured. The use of different instruments for industrial policy is reviewed. The paper assesses whether changes have been due to compliance to multilateral and/or regional commitments, and whether due to unilateral reform efforts. The authors focus on the role of industrial policy in the post Uruguay Round era with a view to the next round of WTO negotiations. The research examines both the theoretical and applied aspects of industrial policy before surveying the extent to which existing WTO rules affect a member's ability to pursue industrial policy objectives. The possibilities and implications of revising rules that affect the use of industrial policy instruments in the next round are examined. The paper concludes with a final section to review the implications for developing economies.