Countries spend on average 1.4% of GDP on industrial policies through grants and tax expenditures, with a preference for tax expenditures, and provide an additional 1.8% of GDP through financial instruments (loans, loan guarantees, equity investments – including 1.1% of GDP on export finance schemes).
Quantifying industrial strategies
Quantification is crucial to guide policymaking, contribute to global transparency on government support to businesses, facilitate international co-ordination, and evaluate the effectiveness and efficiency of industrial policies and strategies. In response, OECD gathers publicly available data and measures industrial strategies across OECD countries through harmonised data on industrial policy expenditures, their composition, their mode of delivery, and the characteristics of their beneficiaries.
Key messages
On average, sectoral policies represent almost 30% of industrial policy grants and tax expenditures, much more than industrial policies with a ‘green’, ‘jobs and skills’ or ‘SMEs and young firms’ component, each category representing between 10% and 20% of grants and tax expenditures. The scale of industrial policies supporting the digital transition is still smaller in the countries analysed, representing around 3% of grants and tax expenditures.
Green instruments rose in most countries between 2019 and 2021 (from 0.22% to 0.24% of GDP, on average) and are to a large extent also sector- or technology-specific. All countries signal commitments to continue this trend. Green grants are particularly driven by instruments supporting the production of renewable electricity in the energy sector and targeting specific technologies (e.g., wind turbines). Support to reduce process emissions or the use of fossil fuels in the transport and manufacturing sectors is less important.
Industrial policy grants and tax expenditures range from 0.6% of GDP in Ireland to 2.3% in the United Kingdom. There is also a considerable degree of heterogeneity in terms of strategic priorities. 34% of grants and tax expenditures are green in Denmark vs less than 1% in Ireland; 35% is related to jobs and skills in France vs less than 1% in Israel. In the Netherlands policies supporting ’SMEs and young firms’ represent 30% of grants and tax expenditures, compared with 12% on average across the country sample. Financial instruments range from 0.4% of GDP in Ireland and the United Kingdom to 5.4% in Canada, where the larger expenditure is mainly explained by a higher level of export finance.
There is also substantial heterogeneity between countries when it comes to COVID emergency support to businesses. Countries participating in the QuIS project provided an average of 7% of GDP on COVID support in the form of financial instruments in 2020. On average, 2.5% of GDP was spent on grants and tax expenditures for COVID emergency support in 2020. In most countries, COVID support through financial instruments was rapidly phased out, while emergency grants and tax expenditures remained sizeable in 2021 (1.5% of GDP)
Country fact sheets, country notes and QuIS data
An overview of each country’s industrial strategy and comparison with other participating countries. QuIS fact sheets only show the most relevant features of each industrial strategy and a few policy examples.
A detailed description of each country’s industrial strategy and comparison with other participating countries. The QuIS country notes are more exhaustive and provide more policy examples.
The QuIS database gathers data on industrial policy expenditures at the policy instrument level categorised by instrument type and eligibility criteria. Industrial policy expenditures are defined as direct support extended by the public sector to businesses, aimed at promoting investment (including digitalisation and cleaner production), improving competitiveness, or supporting economic development. The eligibility criteria are the following: 'Digital', 'Green', 'Sectoral', 'Technology', 'SMEs and young firms' , 'R&D', 'Jobs/skills'. The eligibility criteria are not mutually exclusive and some instruments are not categorised in any of the criteria. In addition, instruments belonging to the categories 'COVID emergency support' or 'EU support' are flagged as such.
There are two datasets, one for each expenditure type:
Context
Industrial policies are sizable
Support in the form of grants and tax expenditures varies from 0.6% of GDP in tax expenditures in Ireland to 2.3% in the UK. There is a high level of heterogeneity in the composition of the industrial policy support, which is particularly visible in financial instrument support as share of GDP and the share of direct support in the form of tax expenditures.
Eligibility criteria as percentage of grants and tax expenditures
On average, sectoral policies represent almost 30% of industrial policy grants and tax expenditures, much more than industrial policies with a ‘green’, ‘jobs and skills’ or ‘SMEs and young firms’ component, each category representing between 10% and 20% of grants and tax expenditures. Industrial policies supporting the digital transition are still small in the countries analysed, representing around 3% of grants and tax expenditures.
There is also a considerable degree of heterogeneity in terms of strategic priorities. Among the countries in QuIS, for instance, 35% of grants and tax expenditures are related to jobs and skills in France while this is less than 1% in Israel.
Sectoral support primarily targets energy, transport and manufacturing
Sectoral support, mostly via grants and tax expenditures, primarily targets energy, transport and manufacturing. Support targeting the energy sector is mostly provided through green grants, representing a key role in the industrial strategies of Italy, Denmark and France. There is an overall preference for supporting the transport sector through tax expenditures on fuel taxes and on maritime transport.
Although other service sectors are rarely targeted by sectoral support, they may largely benefit from non-sectoral support as they represent a large share of value added in participating countries.
Related publications
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Working paper10 September 2013
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