What is the meaning of industrial policy?

Industrial Policy is defined as the strategic effort by the state to encourage economic transformation, i.e. the shift from lower to higher productivity activities, between or within sectors.

What is the purpose of industrial policy?

The main objective of any industrial policy is to augment the industrial production and thereby enhance the industrial growth which leads to economic growth by optimum utilization of resources; modernization; balanced industrial development; balanced regional development (by providing concessions for industrial …

What are the basic elements of an industrial policy?

summary, there are four key elements relevant to industrial policy design: priorities, objectives, instruments and institutional responsibilities ( Table 1 presents brief definitions of these concepts). …

What are the advantages of industrial policy?

Government-led industrial policies can ameliorate the phenomenon of sub-optimal private investment under certain scenarios. When setting industrial policies, governments should target industries based on the structure of factor endowments (the comparative advantage of labor or capital) by making use of price signals.

How does industrial policy affect the economy?

In addition, by using a set of means, such as credit, taxation, subsidies and entry threshold reduction, industrial policy can decrease market failures caused by factors such as externalities and imperfect market mechanism, improve resource allocation efficiency and promote industrial development (Wei et al. 2018).

What is industrial policy in business environment?

Industrial policy is a document that sets the tone in implementing, promoting the regulatory roles of the government. It was an effort to expand the industrialization and uplift the economy to its deserved heights. It signified the involvement of the Indian government in the development of the industrial sector.

What is the new industrial policy?

With the New Industrial Policy’ 1991, the Indian Government intended to integrate the country’s economy with the world economy, improving the efficiency and productivity of the public sector. To accomplish this objective, existing government regulations and restrictions on industry were removed.

What are the disadvantages of industrial policy?

Despite their goals, government industrial policies can hamper innovation and restrict growth. Governments often subsidize industrial firms, either permanently or in times of economic stress.

What is the primary disadvantage of industrial policy?

The fundamental problem with industrial policy is that government bureaucracies do not have the same incentives to focus on consumer welfare that market participants have.