**Introduction** Developing economies have expanded their use of industrial policy tools since the global financial crisis because the post-2008 environment increased exposure to external shocks, intensified competition for investment and technology, and shifted policy thinking away from a model based primarily on liberalization toward one that includes targeted state support. The result has been broader use of subsidies, investment incentives, local content measures, and state-backed financing to build domestic capacity, manage strategic dependence, and secure participation in clean energy and technology value chains[1][2][3][4]. **Drivers of expanded industrial policy after the global financial crisis** **1.** **Greater exposure to external shocks and a strengthened resilience focus** The global financial crisis demonstrated how rapidly export demand, commodity prices, and external financing conditions can deteriorate. Subsequent disruptions — including pandemic-related supply chain bottlenecks and rising geopolitical tensions — have reinforced resilience as a core policy objective. Industrial policy has been used to reduce supply concentration risk, expand domestic production capacity in essential sectors, and lessen dependence on a narrow set of foreign suppliers[1][2]. **2.** **Intensified competition for manufacturing, technology, and low-carbon investment** Competition for internationally mobile capital has intensified as governments deploy incentives to attract higher-value manufacturing and secure participation in strategic supply chains. This has led developing economies to adopt comparable instruments —tax incentives, special economic zones, concessional financing, and infrastructure support — to maintain competitiveness in emerging industries. Expansion of targeted measures continues to align with industrial development objectives, including renewable energy, advanced manufacturing, and other higher-value activities[3]. **3.** **Climate transition pressures and the expansion of low-carbon industrial strategies** The transition to low-emission energy systems has generated large, policy-driven markets for renewable energy equipment, batteries, and related inputs. Developing economies increasingly use industrial policy to shift from primary commodity exports toward processing, manufacturing, and related services. This approach aims to increase domestic value added and reduce exposure to price volatility and supply disruptions in energy-transition value chains[2][3]. **4.** **Reduced multilateral discipline and expanded policy space for intervention** The post-crisis period has coincided with more frequent use of trade and trade-related measures, continued policy spillovers, and constraints on the effective enforcement of multilateral rules. During 2024–2025, trade monitoring exercises recorded a sustained accumulation of new measures, while negotiations on subsidy disciplines and dispute settlement reform progressed slowly[4][5]. In this setting, intervention is less likely to be effectively constrained through multilateral mechanisms, increasing the durability of industrial policy measures — particularly for economies facing intensified external pressure[1][4][5]. **Conclusion** Industrial policy expanded in developing economies after the global financial crisis because the external environment became more volatile and competitive. More frequent shocks, intensified strategic competition, the transition to low-emission energy systems, and reduced multilateral discipline altered the incentives facing policymakers. In response, governments made greater use of direct instruments — subsidies, investment incentives, local content requirements, and state-backed financing — to strengthen resilience, attract and retain higher-value activities, and support structural transformation in a more uncertain global economy.
