A Case for Industrial Policy towards Green Economy Transition in Developing Economies

Abstract

The essence of green economy transition is resource efficiency for improved economic, environmental and human well-being. For primary commodity-endowed developing countries, this reflects a call for industrialisation to reduce economic dependence on primary commodities. The now desired ‘green’ industrialisation makes the industrialisation process a double structural transformation for developing economies. The technological and pecuniary barriers of such a transformation render market allocations unlikely to efficiently and speedily facilitate the process. Through an analysis of discourses in the industrialisation and green economy transition spaces, this paper argues a case for green industrial policy in developing countries. It finds merit for a temporal and scope limited green industrial policy regime as a plausible route to green industrialisation in developing countries. It concludes that industrial policy is most effective when the dominant policy regime limits or prevents rent-seeking practices and only supports interventions that confer systemic competitiveness and efficiency.