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Industrial Strategy

Research into industrial and innovation policies including work in the Programme on Innovation and Diffusion (POID) and the Productive and Inclusive Net Zero research project (PRINZ).

Many governments are pursuing more activist industrial policies, targeting specific sectors, technologies or places with support. Our research has provided evidence on the causal effects of an industrial policy, and documented different types of industrial policies in use internationally.

We have been heavily involved in the UK policy debate. The LSE Growth Commission highlighted in 2017 how the longevity of frameworks and strength of institutions governing industrial policy compared poorly with other areas of UK economic policy. In 2023, our work with The Productivity Institute made the case for a new growth and productivity institution that would play a role in informing a successful industrial strategy.

To inform areas of focus, our Economy 2030 Inquiry research has provided evidence on the UK's comparative advantages - including across broad range of services, life sciences and clean technologies, and the policies that can stimulate much-needed investment.

In collaboration with Grantham Research Institute colleagues, we have set out how sustainable investment and green industrial policy can be embedded in a growth strategy for the UK with "deep dives" into key technologies such as carbon capture, usage and storage and tidal stream, and analysis of net zero and the labour market.

Our research also explores how to support innovation activities in firms, including evaluating government programmes, collaborating in their design and generating new data on business technology adoption.

Aerial view of London's city buildings and the Thames during daytime, credit MJ Tangonan via unsplash.com https://unsplash.com/photos/aerial-view-of-city-buildings-during-daytime-KWFuoKcvkAU
A new UK policy institution for growth and productivity: A blueprint

Addressing the UK's productivity crisis is urgent if the UK is to see sustainable increases in living standards once more, particularly given the headwinds of fiscal constraints and demographic change and a dedicated, independent policy institution, that is unwaveringly focused on finding solutions to the productivity problem, is a key part of the answer.
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Enduring strengths

The report uses global data on trade in goods and services and patenting to uncover where the UK's relative strengths lie; we study the extent to which these strengths have changed over time and compare with international peers; and undertake several deep dives into the areas in which the UK has developed a specialism. Finally we consider what the UK's mix of specialisms means for a wider economic strategy.
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Growing clean

This report provides a hard-headed assessment of the opportunities presented to UK plc by the move to net zero, and considers how best these can be unlocked. It investigates the extent of UK strengths that can be built upon to accelerate domestic deployment of related technologies and unlock export opportunities. Finally, it assesses how the UK's financial sector can be oriented towards delivering the investment needed for net zero.

Industrial Strategy Publications

Journal article
American Economic Journal: Macroeconomics:
Import liberalization as export destruction? Evidence from the United States

In trade models with scale economies import liberalization reduces exports within industries by shrinking real market potential. We find this export destruction mechanism reduced US export growth following the permanent ...Read more...

Holger Breinlich, Elsa Leromain, Dennis Novy and Thomas Sampson

1 July 2026

Blog
LSE USAPP:
The US-China rare earths deal shows the importance of critical materials in a new era of strategic interdependence

The accelerating shift to clean energy and advanced technologies is redrawing the map of global economic power. As nations and firms race to secure critical minerals, rare earths - small in trade value but high in strate...Read more...

Gavin Harper and Viet Nguyen-Tien

31 October 2025

Blog
LSE British politics and policy:
Universities are engines of growth and must be backed by policy

The Industrial Strategy identifies growth-driving sectors that will require a highly-skilled workforce. Higher education will be a key to unlocking this ambition. But as universities aim to recruit the best talent from a...Read more...

Aadya Bahl and Sandra McNally

21 July 2025

Blog
Vox EU:
Export strength does not equal tech strength: Rethinking EU comparative advantage

Amid geopolitical shocks, the EU is revisiting its industrial strategy. However, traditional metrics often paint a misleading picture of Europe's underlying strength. This column uses a new approach to measure the EU's r...Read more...

Filippo Di Mauro, Marco Matani and Gianmarco Ottaviano

25 June 2025

Blog
World Bank blogs:
Tax incentives for R&D can spur innovation and growth - when done right

As the debate around industrial policy intensifies, there is broad consensus on the rationale for government support to encourage private sector innovation. Economy-wide returns from research and development (R&D) in the...Read more...

Matej Bajgar and Chiara Criscuolo

13 June 2025

Government consultation
Invest 2035: the UK's modern industrial strategy

This document presents the submission made in response to the consultation on "Invest 2035: the UK's modern industrial strategy." The consultation was conducted by the Department for Business and Trade from 14 October 20...Read more...

Aadya Bahl, Henry G. Overman and Esin Serin

6 December 2024

Blog
What works Centre for Local Economic Growth:
What might plans for a new industrial strategy mean for local growth?

On Monday, the Government published their green paper for a new national industrial strategy. This sets out the broad direction of their plan for industrial strategy and the thinking behind it, before the full strategy w...Read more...

Will Brett-Harding

16 October 2024

Blog
Vox Talks (podcast):
The economics of strategy (podcast)

Organisations don't just provide employment: they solve, or attempt to solve, important problems in our society. Organizational economics has made some impressive strides in recent years to show what choices organisation...Read more...

Ghazala Azmat

6 September 2024

Blog
LSE British Politics and Policy:
The UK needs a new institution for growth and productivity

As the UK gears up for a General Election, there is no lack of advice on what any new government's priorities need to be. While the margins for policy manoeuvre are perceived to be rather narrow, we can be certain that g...Read more...

Anna Valero, Andy Westwood and Bart van Ark

30 April 2024

Government consultation
Submission to the independent review of the UK Government's approach to net zero

Read more...

Brendan Curran, Esin Serin, Adithya Subramoni and Anna Valero

9 November 2022

Government consultation
Post-pandemic economic growth: Industrial Strategy

In our inquiry into Post-pandemic economic growth: Industrial strategy we will look at the options available to Government to secure our economic recovery from the impact of the coronavirus pandemic. We will want to exa...Read more...

Anna Valero

16 September 2020

Blog
LSE Covid-19 blog:
An LSE action plan for a strong and sustainable recovery

What does 'building back better' actually mean? Nicholas Stern, Sam Unsworth, Anna Valero, Dimitri Zenghelis, James Rydge and Nick Robins (LSE) set out the actions the government needs to take to deliver a sustainable re...Read more...

Nick Robins, James Rydge, Nicholas Stern, Sam Unsworth, Anna Valero and Dimitri Zenghelis

8 July 2020

CEP report
Seizing sustainable growth opportunities from zero emission passenger vehicles in the UK

This is a Special report for the LSE Growth Commission, produced with the Centre for Economic Performance, that provides a set of actionable recommendations to the UK government to drive sustainable growth in the context...Read more...

Ralf Martin, Sam Unsworth, Anna Valero and Dennis Verhoeven

13 February 2020

Government consultation
CVER Response to BEIS Green Paper - Building our Industrial Strategy

Read more...

Lucia Barbone, Steven McIntosh, Sandra McNally and Stefan Speckesser

1 April 2017

Government consultation
CEP Response to BEIS Green Paper - Building our Industrial Strategy

Read more...

Richard Davies, Ralf Martin and Anna Valero

1 January 2017