Argentina’s Diverging Path: Why It’s Abandoning Industrial Policy Even as the World Embraces It

As global economies increasingly turn to industrial policies to bolster competitiveness and resilience, Argentina is charting a distinctly different course. While nations worldwide are employing subsidies, tariffs, and support plans for strategic sectors, Argentina is implementing cuts and closures that threaten its productive network, a move that contrasts sharply with international trends.

Global Embrace of Industrial Policy

A recent report by the World Bank, Industrial Policy for Development: Approaches in the 21st Century, reveals that nearly all countries maintain active industrial policies. The report surveyed national plans from 183 economies, finding that low-income countries target an average of 13 strategic sectors, while high-income countries focus on 6. Subsidies to private companies have reached historic levels, peaking at 4.2% of GDP in upper-middle-income countries.

This represents a significant shift in perspective from the World Bank’s previous stance in 1993, when it discouraged industrial policy following an analysis of the “East Asian Miracle.” The institution now acknowledges that those conclusions “did not age well,” and that current conditions – including automation, protectionism, and sluggish growth – necessitate state intervention.

International Examples of Successful Industrial Policy

Numerous countries have successfully leveraged industrial policies to drive economic growth. Romania has boosted its software industry through tax breaks, while Brazil has reoriented its agricultural research to suit local conditions. South Korea’s bet on heavy industry in the 1970s, supported by subsidies, is credited with fueling sustained GDP growth. These nations have not opted to withdraw from the market or dismantle support organizations.

Argentina’s Contrasting Approach

In contrast to this global trend, Argentina has been dismantling key support structures. Credit programs have been cut, the Instituto Nacional de Tecnología Industrial (INTI) has been weakened, and the national procurement policy has been abandoned. Organizations like CONAE and other development instruments have been left without funding. The exchange rate policy has prioritized anti-inflationary measures at the expense of export competitiveness.

Even the Tierra del Fuego regime, cited by the World Bank report as an example of a poorly designed industrial policy, is not recommended for elimination. Instead, the report suggests improving it with clearer incentives and exit mechanisms, emphasizing that the solution to a deficient industrial policy is redesign, not deindustrialization.

A Recurring Pattern

Argentine economic history reveals a recurring pattern: whenever the world adopts new forms of productive organization, local conservative alliances tend to favor indiscriminate opening and state withdrawal. This approach has historically resulted in debt, brain drain, and a loss of capabilities. As most countries build their 21st-century industrial policies, Argentina risks repeating past mistakes, increasing its vulnerability and dependence.