New OECD data quantifying industrial strategies offers a comprehensive, comparable view of how 11 OECD economies deployed industrial policy tools between 2019 and 2022. The findings reveal significant changes in both the scale and focus of government intervention, with clear implications for policymakers.
Trend 1: Industrial policy spending is growing
Across the 11 countries studied (Canada, Denmark, France, Germany, Ireland, Israel, Italy, Netherlands, Slovenia, Sweden, United Kingdom) industrial policy expenditures through grants and tax incentives grew from an average of 1.40% of GDP in 2019 to 1.55% of GDP in 2022 (equivalent to an increase of 4.1 billion USD), and the amounts channeled through financial instruments (loans, loan guarantees and government venture capital) increased from 0.73% to 0.80% of GDP (equivalent to an increase of 2 billion USD).
This trend is driven by growth in structural policy support—particularly new schemes launched between 2019 and 2022—rather than by COVID-19 responses, which are recorded separately and excluded from these figures. Between 2019 and 2022, governments introduced 206 new industrial policy instruments —equivalent to 21% of the 978 measures in place in 2019—representing, on average, 0.74% of GDP. At the same time, few of the previously introduced policies were retired. In fact, on average, only one in 27 policy instruments is discontinued each year, meaning that many of today’s industrial policies have been inherited from previous governments and maintained.
Trend 2: Sector-specific support declined, while horizontal support increased
OECD QuIS data highlights that the main targets of industrial policy grants and tax incentives are (1) support to specific economic sectors, (2) broad-based investment support, (3) R&D support and (4) the green transition, respectively representing on average 0.40%, 0.29%, 0.28% and 0.28% of GDP in 2022 across the 11 countries covered.
While sectoral policies remain the largest category, one of the most significant strategic shifts has been a move away from these interventions toward horizontal schemes for business investment and green support, while instruments targeting SMEs, sub-national regions and specific technologies also experienced an important expansion. Sectoral support decreased by 10% in GDP terms between 2019 and 2022, while schemes supporting general business investment jumped by 30% in GDP terms. While lower in the total level of support, the expansion in green programs was also important: it jumped by 20% in GDP terms between 2019 and 2022.
The decline in sectoral support was driven partly by reduced support for renewable energy producers in the electricity production sector. As electricity prices rose dramatically in 2022, programs like feed-in tariffs and contracts-for-difference automatically scaled back, since they only pay producers when market prices fall below guaranteed levels. For example, Denmark's wind energy grants fell from 0.16% to 0.06% of GDP, while Italy's solar support dropped from 0.20% to 0.10% of GDP.
General investment incentives schemes expanded significantly driven by a combination of investment grants and tax incentives, while green schemes did so driven by non-sectoral grants for decarbonisation and technology-focused schemes.
Trend 3: Governments are spending more on green industrial policy targets
Another trend has been the expansion of government support for the green transition. This includes programs that encourage the adoption and development of net-zero technologies, such as the use of green hydrogen in manufacturing, as well as measures that promote investment and production in sustainable inputs, like grants for wind electricity generation. Between 2019 and 2022, eight out of eleven countries increased their spending on green industrial policies, representing an increase from 0.23% to 0.27% of GDP, on average.
Among the 11 countries covered, Denmark has emerged as the green policy leader, allocating 0.55% of GDP to environmental targets by 2022. Much of this came through expanded tax exemptions for business purchases of electric vehicles, which grew from just 0.03% to 0.29% of GDP. The Netherlands follows closely, increasing green support from 0.31% to 0.49% of GDP, primarily by transforming its renewable energy support programme into a broader climate mitigation initiative also covering the industry sector and new technologies such as carbon capture and storage.
Germany also boosted its green industrial policy support to 0.33% of GDP in 2022, with most of this increase coming from a major grant programme for energy-efficient commercial buildings, reaching 0.17% of GDP by 2022.
Overall, 79% of green support came through direct grants rather than tax incentives, suggesting governments prefer targeted spending over broad-based incentives for environmental goals.
What's next for industrial policy?
Countries are increasingly relying on industrial policy tools to achieve their strategic priorities, and analysis of recent policy interventions suggests that this trend will continue. The OECD will keep monitoring these trends to help policymakers benchmark their industrial policy mix against that of comparable economies. The next edition of QuiS will feature 20 countries with the objective of becoming even more useful as a key input for peer learning among industrial policy practitioners.
In the meantime, you can read more from OECD on industrial policy on Making industrial policies work: 12 steps for smarter governance or How policymakers can better support start-ups: insights from OECD research.
