Translartion. Region: Russians Fedetion –
Source: State University Higher School of Economics – State University Higher School of Economics –
Industrial policy is becoming one of the important instruments of structural change in the world to increase the competitiveness of national economies. In order to assess what kind of state support certain sectors receive, Yuri Simachev and Anna Fedyunina from Center for Structural Policy Research HSE University has developed an index of economic complexity of state financial support. The study is presented at XXV Yasinsky (April) International Scientific Conference.
The conference included a round table discussion entitled “New Industrial Policy: Between Technological Sovereignty and International Cooperation”. Experts from universities and research centers discussed the report by Anna Fedyunina and Yuri Simachev entitled “Priorities and Instruments of Modern Industrial Policy: Subsidies for a Complex Economy”.
The study notes that attention to the implementation of active industrial policy has increased significantly worldwide, which has become an important tool for increasing the competitiveness of national economies. Thus, references to industrial policy in the media have increased 8 times since the 2000s. The authors note that the most important prerequisites for increased attention to industrial policy instruments are increased competition between developed and developing countries in the markets for complex products, regionalization and expanded use of trade protection instruments, and strengthening of the tasks of technological sovereignty.
Scholars define modern industrial policy as an attempt by the state to facilitate the flow of resources into specific sectors that the state considers important for future economic growth. In addition, industrial policy aims to improve the business environment and/or the structure of economic activity by sector, technology, and should ensure that, through intervention, the prospects for economic growth and public good are better than those without such intervention.
It is important that developed countries, contrary to popular belief, also actively use industrial policy. The share of such measures in trade policy increased in developed economies from 11% in 2010 to 53% in 2022, and in emerging market and developing countries — from 9 to 22%. Subsidies have become the key instrument of industrial policy; today, they account for about half of all measures formalized in regulations. Moreover, subsidies are used more often by developed countries, since they have greater financial resources. OECD countries spend an average of 1.4% of GDP on grants and tax breaks and an additional 1.8% of GDP on financial instruments: loans, guarantees, and investments (of which 1.1% of GDP is accounted for by export financing programs).
Yuri Simachev and Anna Fedyunina developed an index of economic complexity of state financial support (IESFS), which reflects the complexity of product groups/activities receiving state support: the higher the IESFS, the more technologically complex the sectors supported. The study showed that, in general, those countries with a more complex economy tend to provide more assistance to relatively simple (within the country’s economy) sectors for the purpose of equalization and greater sustainability, while those countries with a simpler (less competitive) economy are more motivated to develop more complex sectors.
Russia is characterized by the highest relative complexity of state support (which is comparable with Vietnam and China) in the group of countries with similar economic complexity. Iran, under sanctions, has placed its bets on developing its own technologies. Mexico and Malaysia are among those lagging behind in the “complexity” of state support, since their economies are connecting and use the effects of friend-shoring (transfer of production activities from other countries). For the United States, with its leadership in economic complexity, support for relatively simple sectors that provide employment (for example, metallurgy) is politically significant.
“Developed countries are redistributing the rents of technological leadership to achieve sectoral convergence, while emerging market countries are trying to find new sectoral and technological opportunities for rapid growth to escape the middle-income trap and reduce the distance with leading countries,” the researchers conclude.
Please note: This information is raw content directly from the source of the information. It is exactly what the source states and does not reflect the position of MIL-OSI or its clients.