Industrial policy to boost innovation not ‘magic cure’ for slow growth, IMF warns

Aggressive government intervention could create expensive mistakes and prompt subsidy battle

Aggressive use of industrial policy by the world’s most powerful economies risks becoming an expensive mistake that could trigger a tit-for-tat subsidy war, the International Monetary Fund has said.

In a warning shot to governments around the world, the IMF said attempts to increase innovation only worked under certain limited conditions and were not a “magic cure” for slow growth.