ILO Research Department Seminar

Green Industrial Policy and Trade: Synergies and Conflicts

Presenter: Jorge Vinuales, University of Cambridge

This seminar will introduce the ongoing work by Partnership for Action on Green Economy (PAGE) organizations on Green Industrial Policy and Trade. The need for government intervention to sustain the transition to an inclusive green economy has gained traction, particularly after the 2008 economic crisis. A variety of policy rationales (e.g. situations where the forces of the market lead to undesirable or sub-optimal outcomes, sometimes called ‘market failures’) have been identified as a basis for the conduct of green industrial policies.

These policy rationales include lack of appropriability of certain benefits, imperfect competition in goods markets, capital markets failures, learning processes, potential for increasing returns to scale, potential for agglomeration economies, and coordination/sequencing problems. Within the broad range of policies that can be used to act on these policy rationales, a sub-set consists of trade (e.g. border measures or provisions in trade agreements) or trade-related measures (e.g. support schemes, standards, sustainable public procurement and manufacturing, and employment-related schemes).

The need to harness trade as a powerful activity to support the transition to an inclusive green economy has been increasingly recognized by States in international policy frameworks, particularly in the Sustainable Development Goals adopted in 2015 as part of the 2030 Agenda for Sustainable Development. On the basis of this mandate, PAGE is preparing a manual on Green Industrial Policy and Trade. The seminar will introduce the key components of this manual.