Priorities and instruments of modern industrial policy: Subsidies for economic complexity

Yu. V. Simachev () and A. A. Fedyunina ()

Voprosy Ekonomiki, 2025, issue 8

Abstract: The article examines contemporary priorities and instruments of industrial policy — defined as policies aimed at structural change in the economy — in the context of increasing geopolitical instability, technological competition, and the growing importance of structural transformation. An original index of the economic complexity of government financial support is proposed, based on the methodology of economic complexity, which allows for cross-country comparisons of the orientation of industrial support. An analysis of more than 6,500 unique regulatory acts from the GTA Corporate Subsidy Inventory shows that developed countries tend to support sectors with high technological complexity, while emerging market economies are more inclined to assist less complex but systemically important industries. It is also revealed that targeted SME support is often concentrated in traditional or simple sectors, serving functions related to social stability and inequality reduction. A positive correlation is found between a country’s overall economic complexity and the complexity of its industrial policy portfolio. At the same time, it appears that the industrial support provided by developed countries is relatively simpler compared to the complexity level of their national economies, whereas the priorities of emerging market economies are more often aligned with relatively complex sectors within their domestic contexts. Thus, catching-up economies aim to accelerate structural shifts toward technologically complex sectors, while developed economies can afford a more balanced approach to economic growth.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:nos:voprec:y:2025:id:5464

DOI: 10.32609/0042-8736-2025-8-5-25

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