Institutions for Industrial Policy: The Foundation of Economic Development

Reda Cherif, Fuad Hasanov and Gary Xie

No 2026/063, IMF Working Papers from International Monetary Fund

Abstract: We propose an institutional architecture for the successful implementation of industrial policy inspired by the Asian Miracles—Japan, Korea, Taiwan Province of China, Singapore, and Hong Kong SAR. The key institutional arrangement is a leading agency, accumulating sector-specific knowledge through continuous experimentation and feedback from markets, to design the sector- and context-appropriate package of policies, which is a priori unknown, and coordinate its implementation. We also postulate a 4A model of institutional features of the leading agency: Ambition-Agency, Autonomy, Accountability, and Adaptability. We draw strong parallels with the rise of independent central banks, inferring concrete steps to achieve these characteristics.

Keywords: Industrial Policy; Technology and Innovation Policy; Economic Growth; Institutions for Development; Planning Agencies; Asian Tigers.; central bank; executive branch; Federal Reserve; leading agency; economic policy; public goods; prime minister; Exports; Automobile industry; Export performance; Global; East Asia (search for similar items in EconPapers)
Pages: 76
Date: 2026-03-27
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