IMF Warns Against Industrial Policy as Panacea for Growth

• 11 Apr 2024

On 10th April, IMF stated that recent industrial policy initiatives by US, Europe, etc., may not spur growth.

Key Points

• Caution on Industrial Policy: IMF cautions against viewing industrial policy as a quick fix for economic growth.
• Broader Policy Mix Needed: IMF suggests a mix of policies including public funding for research and R&D grants for innovation.
• Impact of Research Funding: Boosting public spending on fundamental research could significantly impact GDP and debt-to-GDP ratio.
• Recent Industrial Initiatives: Various countries have undertaken industrial initiatives, but IMF stresses the need for careful policy design.
• Focus on Technology Diffusion: Less technologically advanced countries urged to focus on policies promoting technology diffusion for faster growth.