CORE SESSION 3: GROWTH AND DEVELOPMENT

Industrial policy must anticipate change and continuously adapt.

Current advantages are temporary. Technological disruption can erode demand for established commodities and change which resources are strategically important. Countries must use existing strengths to build capabilities and identify future opportunities, rather than assume today’s advantages will endure.

Development requires continuous course correction. Policy should establish a direction while remaining responsive to an uncertain, moving technological frontier. Foresight, monitoring and the capacity to adjust are essential to navigating shocks, trade barriers and changing competitive conditions.

Strategic patience can improve technology adoption. Adopting costly technologies first is not always the best development strategy. Economies facing high opportunity costs may benefit from letting early movers absorb experimentation costs before integrating technologies when they become more affordable and useful.

Economic upgrading depends on incentives and power, as well as capabilities.

Firms must have both the ability and the motivation to upgrade. Competition creates pressure to innovate and survive, while protected firms may see little reason to change. Owners who no longer wish to continue a business may also stop investing, even when upgrading is technically possible.

Entrenched interests can obstruct reform. Businesses with political influence can shape policies that preserve their advantages and weaken competitive pressure. Change becomes difficult when those benefiting from the system also control its reform, although crises and external competition can create openings.

Global power shapes development opportunities. Industrial upgrading takes market share from existing producers, so support from advanced economies cannot be assumed. Their influence over trade rules and green standards also affects which technologies, products and development pathways gain acceptance.

Resilience is a deliberate choice with costs, trade-offs and collective benefits.

Preventing losses can matter as much as recovering quickly. Learning from Japan, resilience can mean building guardrails that limit damage, rather than simply restoring activity after a crisis. Such protection may sacrifice some gains or efficiency, reflecting society’s preferences for stability, longevity and acceptable risk.

Visible costs and invisible benefits weaken incentives to prepare. Spending on resilience is readily observed, while its success often appears as a problem that never occurs. Expectations of government rescue can further discourage preparation, making incentives and accountability central to effective protection.

Diversity and coordination must account for shared vulnerabilities. A system can appear diversified yet remain exposed to the same shock. Lessons from nature suggest combining diverse risk exposures with collective intelligence, while preserving the ability to challenge coordinated behaviour when it leads the system in the wrong direction.

Quotes

“In Formula One, staying in an opponent’s slipstream reduces air resistance and helps you build speed to overtake. Technology rewards the same strategic patience. Let first movers bear the learning costs, then move when costs fall and adoption makes sense.”
– Prof Amir Lebdioui

“More shocks mean greater disruption to the status quo and greater opportunities for change.”
– Prof Krislert Samphantharak

“We now live in a world where resilience eats efficiency for lunch.”
– Prof Ulrike Schaede