Industrial Policies for Supply Chain Resilience

Governments are increasingly pursuing industrial policies with supply chain resilience as their stated objective. This paper examines the economic rationale, international implications and policy design challenges of supply chain resilience initiatives. Using a simulation‐based approach, it analyses three policy instruments: export taxes, production subsidies and entry subsidies. The simulations demonstrate how uncoordinated national policies can lead to inefficient outcomes, with uncooperative export restrictions and production subsidies potentially reducing global supply chain robustness. The analysis emphasises the importance of international coordination. To address these challenges in a multilateral setting, the paper suggests three priorities: expanding the Multi‐Party Interim Appeal Arbitration Arrangement (MPIA), advancing plurilateral dialogue on green subsidies, and establishing multilateral mechanisms for supply chain data sharing. With deeper cooperation, governments can pursue strategies that improve both average economic outcomes and supply chain robustness.