There is a long tradition in global economic history in which institutions first elevate a doctrine to the status of universal truth, then quietly revise it when the world they helped shape no longer conforms to its assumptions. The most recent chapter in this tradition comes from the World Bank, whose March 2026 report on industrial policy signals a striking reversal after decades of doctrinal resistance. The Chief Economist, Indermit Gill, writes in the preface that earlier scepticism toward industrial policy “has not aged well,” adding, with carefully chosen levity, that it now has “the practical value of a floppy disk.” The metaphor is memorable, though one suspects that for many countries subjected to the Bank’s earlier certainties, the issue was never technological obsolescence but developmental cost.
To understand the significance of this shift, it is necessary to recall how firmly the World Bank once positioned itself within what later came to be called the Washington Consensus. From the 1980s onward, its policy architecture promoted liberalisation, privatisation, and fiscal discipline as the foundational conditions for development. Industrial policy, by contrast, was treated as an analytical misstep: a distortion of price signals, a breeding ground for rent-seeking, and a deviation from the rational allocation of resources under competitive markets.
This intellectual posture rested on a simplified reading of classical political economy, drawing selectively from The Wealth of Nations and David Ricardo, as interpreted through late 20th-century neoclassical economics and institutionalised in policy advice often associated with the Chicago School. In this framework, comparative advantage was treated not as something constructed through policy and institutional learning, but as an exogenous fact of nature, determining what countries should produce rather than what they might become capable of producing.
The historical irony is difficult to ignore. Every major case of successful late industrialisation contradicts this assumption. Alexander Hamilton, in his 1791 Report on Manufactures, explicitly argued that infant industries required protection and state support to survive early exposure to global competition. Germany’s industrial ascent in the 19th century was shaped by strategic tariff policy and coordinated financial institutions. Japan’s postwar industrial transformation was guided by state coordination through institutions such as the Ministry of International Trade and Industry, which actively shaped investment patterns, technology adoption, and export discipline.
More recently, South Korea and Taiwan demonstrated that rapid structural transformation required precisely the kind of industrial policy the World Bank discouraged elsewhere. As Ha-Joon Chang has argued in his historical work on development strategy, what is presented as universal free-market wisdom is often a retrospective reconstruction of how today’s rich countries industrialised after the fact, once they had already climbed the ladder.
Yet for much of the postcolonial world, including Nigeria, the consequences of this intellectual framing were not theoretical. Under the structural adjustment programmes of the 1980s and 1990s, Nigeria liberalised trade, devalued its currency, and dismantled elements of its state-led industrial strategy. The expectation was that market signals would reallocate resources toward more efficient uses. What followed, instead, was a weakening of manufacturing capacity, declining industrial depth, and increasing dependence on primary commodity exports.
This outcome was not unique to Nigeria. Across much of Sub-Saharan Africa and parts of Latin America, premature deindustrialisation became a defining pattern of the neoliberal era, as documented by Dani Rodrik and others. Countries began to lose manufacturing capacity at income levels far below those of earlier industrialisers, suggesting that integration into global markets without industrial capability does not automatically generate convergence.
The World Bank’s response at the time was to emphasise governance reforms, macroeconomic stability, and trade openness, while continuing to view industrial policy as either ineffective or politically risky. Even in its more nuanced moments, such as the 1993 East Asian Miracle report, the institution acknowledged state intervention only to reclassify it as secondary to market-friendly fundamentals. The result was an analytical tension that never fully resolved itself: empirical evidence pointing in one direction, policy orthodoxy in another.
The current reversal, therefore, is not an isolated intellectual event but a response to broader transformations in global political economy. The resurgence of industrial policy in the United States, the European Union, and China reflects a world in which supply chain security, technological competition, and climate transition have made state intervention unavoidable. Semiconductor subsidies, green industrial strategies, and strategic trade policies are now central features of advanced economies.
In this context, the World Bank’s repositioning appears less like discovery than adaptation. The same institution that once warned developing countries against industrial targeting now acknowledges its ubiquity, noting that a majority of its country economists report governments actively engaging in such policies. The language has softened, the categories have been refined, and the tone has shifted from prohibition to conditional acceptance.
What remains unchanged is the reluctance to fully confront the distributive consequences of its earlier stance. To suggest that industrial policy should now be “considered” is to preserve analytical continuity while avoiding institutional accountability. It allows the Bank to update its policy menu without revisiting the structural asymmetries produced by decades of discouraging state-led industrialisation in countries least equipped to absorb the costs of premature liberalisation.
For Nigeria, this history is not abstract. It is embedded in the trajectory of its industrial sector, in the policy oscillations between state planning and market liberalisation, and in the persistent difficulty of achieving sustained manufacturing growth. It is also reflected in the institutional weakness that emerged when industrial strategy was abandoned before alternative governance structures were fully developed.
The deeper lesson is that development is not a mechanical outcome of market efficiency but a historically contingent process of capability formation. Industrialisation requires coordination, protection, learning, and above all, state capacity. These are not distortions of the market; they are the conditions under which markets themselves emerge in productive form.
If there is a final analogy worth drawing, it is this: for decades, developing countries were handed a map that omitted the most important roads to industrialisation. When they failed to arrive at the destinations marked on that map, they were told the problem lay in their navigation rather than the accuracy of the chart itself. The World Bank’s latest report suggests that the map is finally being redrawn. The question is whether the journeys lost along the way will be acknowledged, or simply filed away as historical noise in the margins of institutional memory.
