Demand-driven policy interventions to foster industrial development: Can they be inclusive and sustainable?

Author(s): Fernando Santiago & Miriam Weiss
Working Paper No.: 2018-06
Keywords: Demand-driven policy, industrialization, developing countries, innovation

This paper explores recent demand-driven policy initiatives implemented to foster industrial development in developing countries. The evidence builds on various case studies organized around an analytical framework that draws from the literature on demand-driven innovation policy, sustainable consumption policies and industrial policy. The findings indicate that demand-driven interventions are usually implemented as part of broader policy mixes including supplydriven measures; demand-driven interventions help shape market dynamics and consumer behaviours. We identify the various goals governments in developing countries pursue through demand-driven industrial policy beyond competitiveness and employment creation, to include inclusiveness- and sustainability-related targets. The nature and scope of demand-driven policies in support of sustainable and inclusive industrial development is larger than we traditionally think; governments can be consumers of manufacturing, but they can also act as regulators, information providers or actual partners in innovation.


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