Industrial Policy with Conditionalities: a Taxonomy and Sample Cases

This paper looks at how industrial strategy can use conditionalities to make sure that public-private partnerships are goal-oriented with conditionalities that serve public purpose. Conditionality can be a key tool to shape markets and foster inclusive and sustainable economic growth. We develop a taxonomy to understand the range of conditionalities that governments and policymakers can consider when structuring calls for proposals, funding agreements, partnership contracts, tax incentives, regulatory frameworks, and other policies aimed at shaping the economy for the common good. The paper first provides an analytical framework for exploring the role that conditionality can play in modern industrial strategies. It then highlights a range of global case studies (lessons learned, both positive and negative) to explore the different dimensions of conditionalities and what they can achieve in practice.