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Figure 5-4. Mapping direct and indirect exports by sectormaintaining global competitiveness in manufacturingindustries and have sought with varying degrees of successto upgrade technologically to higher value-added segmentsof those industries.5.2.3. Infrastructure, industry and growthInfrastructure supports growth and, in particular, industrialdevelopment. Adequate, resource-efficient economicinfrastructure improves productivity and reduces the costsof existing and new productive activity. Also, the availabilityof infrastructure may help to attract investment and togenerate agglomeration economies through attractingproductive capacity to a specific location. 424 If introduced toplaces where disadvantaged groups are located, suchphysical infrastructure as energy, water, roads andcommunication facilities can have a major direct impact onthe ‘inclusiveness’ of growth. 425 Hence, ensuring inclusiveand sustained growth through structural transformationwill require investments in complementary economic andsocial infrastructure. 426In the context of the post-2015 development agenda,countries face the challenge of planning long-terminfrastructure investments in ways that do not lock theminto unsustainable patterns of development. This applieswith particular force to transport and energy infrastructure,where the choice of modal mix and the energy mixrespectively have longstanding consequences for theenvironmental impacts of development.5.2.4. Industrial policies for structural transformation:rationales, scope and policy areasIndustrial policy rationalesOver the past two decades the global industrial landscapehas been reshaped by profound structural transformations.These dynamics have been mainly driven by changes withinand increasing interdependencies across nationalmanufacturing systems, as well as alterations to theirunderlying technologies. De-industrialisation (the loss ofmanufacturing industries), increasing trade imbalances anddecreasing technological dynamism have all been majorconcerns in advanced industrial economies. Meanwhile,many middle-income countries have faced difficulty92In order to govern these structural transformations andrespond to the social and environmental sustainabilitychallenges they pose, a variety of industrial policies havebeen designed and implemented by governments in therecent past. 427Industrial policy scopeIndustrial policies include all policy interventions affectingindustries – their productivity growth, employmentintensity and technological dynamism. Therefore, industrialpolicies encompass a broad set of policies.Industrial policy carries a broad definition nowadays,targeting not only manufacturing industries but also highvalue-added activities in the agro-processing and otherresource-based sectors, as well as a number of knowledgeintensiveand production related services. There are tworeasons why the ‘sectoral’ scope of industrial policies hasbeen broadening over the years.First, sectoral boundaries are blurring andinterdependencies between sectors are becoming morecritical as a result of increasing technological linkages. Forexample, productivity in agriculture industries depends onproduction and process technologies developed inmanufacturing industries as well as on informationtechnologies, while certain manufactured productsincreasingly embed new services. Depending on theproduction development and structural composition ofvarious countries’ economies, these sectoral interfaces arebecoming new targets of system level industrial policy. 428Second, with the changing geography of production and theincreasing division of labour within global productionnetworks, countries have been exposed to new productionopportunities and markets as well as new competitivechallenges. Some countries have managed to scale up theirfirms’ production capacity to a global market and havecaptured learning opportunities for enhancing thetechnological content of their products. Others have beenless successful. 429Industrial policy interventions present different ‘degrees ofselectivity’ according to the way in which they are designedand implemented. Even those policy interventions that areconsidered ‘general’ like education and health (also called‘horizontal’ policies) involve some element of selectivity 430 .Beyond primary education, skills development becomes