Title page 1

Contents 6

Abstract 3

Acknowledgments 4

Executive summary 8

1. Quantifying Industrial Strategies: the 2025 vintage 10

Background and methodology 10

Overall trends 12

2. The size of industrial policy support across countries 15

The evolution of grants and tax expenditures 15

The evolution of financial instruments 17

3. The main targets of industrial policy support 19

The level and evolution of expenditures vary across policy targets 19

Industrial policy instruments often combine multiple targets 21

Green industrial policy spending grew in recent years, with grants playing the main role and most support being non-sectoral 22

Support to investment in fixed capital is a major component of industrial strategies and is typically horizontal 24

Energy cost support reached its highest level since the COVID-19 pandemic, with European countries driving much of the increase 25

Government support for SMEs and young firms expanded through grants and tax expenditures, but fell via financial instruments 27

4. Sectoral industrial policy expenditures 31

Energy, manufacturing, and transport received most sectoral support 31

Sectoral support varies widely across countries 32

How targeted is sectoral support? 34

Countries do not systematically allocate targeted grants and tax expenditures to their most productive or export-competitive sectors 36

References 38

Annex A. Supplementary tables 41

Annex B. Supplementary figures 43

Figure 1.1. The QuIS database records multiple dimensions and targets 11

Figure 1.2. The number of policy instruments varies widely across countries 12

Figure 1.3. There is little entry and exit of industrial policy instruments 13

Figure 1.4. Spending via grants and tax expenditures increased between 2019 and 2023 14

Figure 2.1. Several countries saw large increases in industrial policy spending through grants and tax expenditures between 2019 and 2023 16

Figure 2.2. The use of financial instruments remained stable in most countries 17

Figure 3.1. Sectoral development and support to fixed capital investment are the main industrial policy targets 20

Figure 3.2. There is an important overlap between industrial policy targets 21

Figure 3.3. Industrial policy support on green measures increased despite lower support for the energy sector, driven by horizontal measures 23

Figure 3.4. Fixed capital support is mostly provided through horizontal schemes 25

Figure 3.5. Energy cost support increased, driven by horizontal schemes and programmes targeted at the manufacturing sector 26

Figure 3.6. Support for SMEs and young firms via grants and tax expenditure frequently targets fixed capital, labour costs, and R&D 28

Figure 3.7. Guarantees and loans are the key in supporting SMEs and young firms 29

Figure 4.1. Sectoral industrial policies tend to focus on Energy, Manufacturing, and Transport 32

Figure 4.2. Countries support different sectors 33

Figure 4.3. OECD Member countries differ substantially in the targeted nature of their sectoral industrial strategies 34

Figure 4.4. Some subsectors are intensively supported by targeted industrial policies 35

Figure 4.5. Sectoral support is negatively associated with export competitiveness 37

Table A A.1. Definitions of QuIS Targets 41

Table A A.2. Regressions of sectoral support intensity on labour productivity and comparative advantages, 2019-2023 42

Table A A.3. Regressions of sectoral support intensity on value added growth rate and employment, 2019-2023 42

Figure A B.1. Larger economies tend to implement more industrial policy instruments 43

Figure A B.2. Growth came mainly from new measures, while reductions from discontinued measures remained limited 43

Figure A B.3. The average volume of export finance fell to its lowest level in 2023 44

Figure A B.4. Export finance support is mainly delivered through guarantees 44

Figure A B.5. Most QuIS countries expanded support between 2022 and 2023 45

Figure A B.6. The use of financial instruments declined in several countries compared to 2022 45

Figure A B.7. There is no relationship between public spending on green industrial policies and energy-related CO₂ efficiency 46

Figure A B.8. Support for fixed capital through financial instruments decreased on average 46

Figure A B.9. Countries with high energy tax rates tend to provide higher energy cost support 47

Figure A B.10. Government financial support to SMEs and young firms is positively associated with tighter financing conditions 47

Figure A B.11. Many countries have low levels of government venture capital despite limited private venture capital activity 48