The lessons from the 20th century are still relevant – industrial policy for catch-up industrialization in today’s global production system

This paper does not attempt to develop a comprehensive framework for how to design industrial policy for catch-up in the 21st century. Such a framework is beyond the scope of this paper. This paper, however, makes two significant contributions to this broader debate. First, it carefully revisits the literature on industrialization in the 20th century and identifies what can still be learned from these experiences for countries aiming to catch up in the 21st century. It focuses on how ISI and EOI policies were used in complementary fashion, as well as on the important role of domestic firm ownership and of the domestic market. Second, it uses these lessons to carve out the limitations of an industrialization strategy that is purely focused on global value chain participation, and suggests how industrial policy in the sense of 'productive sector policies' can contribute to an industrialization strategy that avoids such a narrow focus.