Why Industrial Policy-making Is the Key to Unlocking Gains From Industrial Policy

The authors contend that for Africa to overcome extreme poverty, it must pursue sustainable industrialization through a modernized approach to policy-making. Rather than seeking a 'golden policy template,' the document proposes a framework based on five tenets: adaptive, consultative, partner-based, transboundary, and capacitated policy-making. This approach is designed to address 'the big five' contemporary challenges: policy consensus, green industrialization, supply chain security, shifting industrial paradigms (such as digitalization), and the expansion of policy space. The authors emphasize that building institutional capacity and utilizing 'policy-testing' zones like Special Economic Zones are essential for navigating the complexities of the current global geoeconomic and climate landscape.

• Sustainable industrialization is identified as the primary route for Africa to escape poverty, as the continent currently accounts for two thirds of the world's extreme poor despite having only 16% of the global population.
• Effective industrial policy in Africa must address five critical contemporary issues: achieving policy consensus and buy-in, pursuing green industrialization to balance prosperity with decarbonization, ensuring supply chain security against geoeconomic fragmentation, adapting to shifting paradigms like digitalization and platform production, and utilizing widened policy space.
• The authors propose a five-tenet framework for upgrading industrial policy-making: adaptive (prioritizing experimentation and learning via 'sandboxes' like Special Economic Zones), consultative (leveraging stakeholder synergies), partner-based (realigning investment toward sustainable agendas), transboundary (pooling resources and using the African Continental Free Trade Area to act collectively), and capacitated (building well-resourced public institutions).
• Green industrialization for Africa involves leapfrogging into cleaner technologies, developing 'green mineral' value chains, and utilizing underused renewable energy and green hydrogen, while ensuring these goals do not compromise just development.
• Digitalization is altering the industrial paradigm by increasing the technology and skills intensity of manufacturing, which may reduce its traditional capacity to absorb rural workers, though it offers new opportunities for outsourced digital services.

APA

Luke, D., & AlWakeel, H. (2025). Why Industrial Policy-making Is the Key to Unlocking Gains From Industrial Policy. International Institute for Sustainable Development. https://www.iisd.org/articles/policy-analysis/industrial-policy-making-unlocking-gains

Chicago

Luke, David, and Hana AlWakeel. Why Industrial Policy-making Is the Key to Unlocking Gains From Industrial Policy. International Institute for Sustainable Development, 2025. https://www.iisd.org/articles/policy-analysis/industrial-policy-making-unlocking-gains.

Wikipedia

{{cite report |last1=Luke |first1=David |last2=AlWakeel |first2=Hana |title=Why Industrial Policy-making Is the Key to Unlocking Gains From Industrial Policy |publisher=International Institute for Sustainable Development |date=8 December 2025 |url=https://www.iisd.org/articles/policy-analysis/industrial-policy-making-unlocking-gains |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{luke2025why, author = {Luke, David and AlWakeel, Hana}, title = {{Why Industrial Policy-making Is the Key to Unlocking Gains From Industrial Policy}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = dec, url = {https://www.iisd.org/articles/policy-analysis/industrial-policy-making-unlocking-gains}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }