The Political Economy of Industrial Policy in the Middle East and North Africa

Abstract:
The claim that industrial policy has become a thing of the past is largely exaggerated. Industrial policies continue to be used throughout the world, but with new modalities and focus that reflect the reality of the new global economic architecture, rapid technological change, and acknowledgement of the costly mistakes made in the past with traditional industrial policy. This paper examines the political economy and consequences of industrial policy in the MENA region. It shows that, unlike in many other regions, industrial policy in MENA developed within the context of a strong “social contract” between government and the people. Although industrial development was an objective, it at times took a backseat to other goals such as social transformation and economic redistribution—influencing not only the types and success of industrial policies adopted, but also the balance of power among interest groups.