For much of the past thirty years, the advice to governments was straightforward, step back and let markets lead. Efficiency, openness, and integration would naturally drive growth. The belief was that if markets were left alone, prosperity would follow. By 2026, however, this narrative no longer tells the full story. Economic success and industrial development are no longer the automatic outcomes of low costs and light regulations.
This shift does not mean that markets have failed. Markets remain essential to allocating resources and generating opportunity. Yet experience has shown that relying solely on market forces is insufficient to deliver resilience, inclusion, and sustainable growth. The global financial crisis, the pandemic, and other shocks revealed the fragility of systems built on efficiency alone. By the early 2020s, it became evident that governments could not remain passive. Industrial policy, once subtle and reactive, has returned in a deliberate and strategic form. Governments are now actively influencing where and how production occurs through incentives, standards, public procurement rules, domestic content requirements, and long-term national priorities.
Business leaders are noticing the difference. The world in which companies operate has become more structured, more directional, and more consequential. From large scale clean energy programs in advanced economies to local content requirements in emerging markets, commercial decisions are increasingly shaped not just by cost or market size, but by the signals sent by governments. Firms that fail to account for these signals risk missing opportunities or misreading the market.
From Cost-Driven to Policy-Driven Decisions
For decades, industrial logic was simple: firms would locate where costs were lowest and regulations were minimal. Today, that assumption is outdated. Governments are steering growth toward priority sectors, including clean energy, advanced manufacturing, life sciences, food systems, digital infrastructure, and the digital economy. The purpose is not to replace markets, but to correct vulnerabilities exposed by recent crises—supply disruptions, skills shortages, and infrastructure gaps.
This has changed how growth is determined. It is no longer about simply chasing the lowest cost or lightest regulation; it is about ecosystems. Companies are choosing locations where reliable power, skilled labor, policy stability, access to finance, and predictable long-term demand exist. Nations that align these elements effectively are gaining a competitive edge, while those relying solely on cost advantages risk being left behind.
For business, this shift has practical implications. Policy literacy is now a core commercial skill. Understanding regulatory trajectories, incentive schemes, and national development strategies is no longer optional—it is essential. Companies that engage constructively with governments, while maintaining commercial discipline, can better navigate risks and seize opportunities. Ignoring policy signals, on the other hand, can lead to costly miscalculations.
Opportunity and Risk for Emerging Economies
Emerging and developing economies face both opportunity and risk in this new landscape. On one hand, the reorganisation of global production is opening space for new industrial hubs. Countries that combine credible strategies, targeted support, and predictable rules are attracting investment in sectors that were previously inaccessible. Manufacturing, processing, and service industries are moving into regions that have the capacity to meet these higher standards.
On the other hand, the margin for error is shrinking. Competing solely on low labor costs or offering open-ended incentives without strengthening institutions, infrastructure, and skills is no longer sufficient. Growth now rewards governments that are deliberate, focused, and disciplined in their industrial approach. Success requires aligning incentives, infrastructure, human capital, finance, and regulations around a limited set of priorities.
Industrial strategy is no longer a theoretical framework; it is a practical tool for shaping national economies. Countries that succeed will be those that govern effectively coordinating across government agencies, engaging with the private sector, and adapting when conditions change. Policy consistency, institutional credibility, and execution capacity are more important than flashy announcements or headline incentives. For nations aspiring to long-term growth, these qualities have become the currency of industrial success.
A Structural Shift in How Growth Is Organised
It might be tempting to view these developments as temporary, a response to recent shocks that will fade over time. That would be a mistake. What is unfolding is a structural shift in how industrial growth is organised. Governments are no longer mere regulators of markets they are active shapers of them. The quality of strategy and execution increasingly determines which economies build lasting industrial capabilities and which lag behind.
For business leaders, this reality requires rethinking how risk and opportunity are assessed. Strategic decisions about where to invest, expand, or source inputs must now consider both commercial and policy factors. Firms that understand the interplay between government priorities and market forces will be better positioned to capture value. For policymakers, this shift demands moving beyond slogans to tangible action. The choices made today will lock in industrial trajectories for years to come.
2026 is therefore more than just another year on the calendar. It represents a pivotal moment when policy choices, investment decisions, and institutional capabilities begin to determine the future of national economies. Firms and governments alike must recognise that sustainable growth now depends on strategic engagement, disciplined execution, and the deliberate shaping of markets. Countries that act with purpose and precision will establish durable industrial foundations, while those that do not risk falling behind.
In this new era, markets and government policy are partners, not adversaries. The countries that understand this balance and the companies that respond intelligently will define the next generation of industrial leaders.
