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What Fiscally Sound Industrial Policy Can Do

While industrial policies can help countries cope with rising economic and political uncertainty, the details matter. Any guidance by the International Monetary Fund on the issue must highlight fiscally prudent tools and emphasize the importance of striking the right balance between protection and market discipline.

SEOUL – I recently gave a talk about industrial policy at the International Monetary Fund. That is a sentence you probably would not have read even a few years ago: historically, the IMF has been a sharp critic of industrial policy. But as many of its client countries embrace the concept, the Fund has recognized the need to clarify its position and update its guidance.