constraints in many countries, partnerships between the state and the private sector could provide viable alternative options.

At the same time, the country’s industrial policy must focus on key sectors, capable of promoting growth and employment and should involve active intervention (Box 3.2). More specifically, the key question for Morocco’s industrial sector –especially manufacturing– is to know how to better integrate into global value chains and compete in international markets. The development of industrial clusters requires a thorough analysis of these value chains. The role of industrial policy in this context is to identify which types of public interventions are able to facilitate insertion into these channels.

# Box 3.2 Industrial Policy and the Role of the State

Historically, industrialization, and more specifically manufacturing industries, have played an important role in promoting rapid and sustained growth. Indeed, the evidence collected by Szirmai (2012) and others suggests that – with the exception of a few small countries that benefited from the successful management of natural resource windfalls – virtually all countries that have sustained high growth rates for the decades since the 1950s did so by building highly competitive manufacturing industries and penetrating rapidly export markets. Moreover, as argued by Rodrik (2013), manufacturing industries appear to exhibit _unconditional convergence_ , in the sense that industries that start further away from the world productivity frontier tend to experience significantly faster productivity growth. However, the robustness of Rodrik’s results have been questioned by Assunção et al. (2015), who found in particular that the speed of convergence also has a nonmonotonic relationship with trade openness and education.

More generally, the view that a large manufacturing sector oriented towards world markets is essential to a rapid advance in living standards has been increasingly questioned. A key argument is that, in a globalized economy, _all_ sectors can improve by learning from those at the technology frontier, and that many possible sources of comparative advantage exist (Dadush, 2015). In particular, advanced infrastructure (ICTs) creates new opportunities to boost the productivity and tradability of a range of services.

The current debate on industrial policy in developing countries (see Pack and Saggi, 2006, and Naudé and Szirmai, 2012) opposes two views: the neo‐liberal view, which maintains a critical perspective of any intervention (selective or not) and the neo‐structuralist view, which argues in favor of selective protection of industries.

There is growing consensus that promoting industry cannot be limited to “passive” interventions to enforce the rules that contribute to the functioning of markets. It is also recognized that traditional interventions in the industrial sector, often aimed at promoting the emergence of national champions, are not always desirable or optimal. The new forms of industrial policy do not fit into either a traditional interventionist approach, nor into actions that would fit the definition of an appropriate regulatory framework. They are a mixed attempt, whose goal is to create the conditions for businesses to invest in technologies and create markets, without interfering with the nature of the products themselves.

More generally, the primary objective of the “new” industrial policy – viewed as an important dimension of growth policy – is to diversify the economy and create new comparative advantages. To weed out programs or operations that have bad results, the use of success or failure indicators is essential. At the same time, the support granted by the state should be limited in time and be granted on activities rather than sectors themselves. Moreover, these activities must be distinguished by their potential to generate technological and informational spillovers. In the same vein, the new industrial policy must avoid public activism involving the choice of products and players. It aims to foster competition and promote innovation.

In the context of the new industrial policy, a key issue is the transition from imitation in the manufacturing sector, a regime mainly based on the partial reproduction or adaptation of foreign‐produced goods, to a regime based on innovation. This transition requires access to skilled labor and advanced ICTs to facilitate the 46