From Efficiency to Prosperity

This chapter examines the recent narrative shift from efficiency to prosperity as the organizing principle of economic policy and assesses its implications for industrial policy in the Global South. While the Washington Consensus constrained policy space and accelerated premature deindustrialization, the pandemic and escalating geo-economic rivalry have legitimized mission-oriented, green, and security-driven industrial policies in advanced economies. These policies combine conditioned subsidies, public procurement, trade defenses, and FDI conditionalities to re-shore capabilities and secure resilient, low-emission value chains. The chapter argues that this turn creates a contingent window of opportunity for Latin America and other developing regions to re-embed industrial policy within a new techno-productive paradigm oriented to decarbonization and good-jobs creation, provided states can rebuild capabilities and exercise strategic bargaining. The analysis advances two claims. First, opportunities are real where domestic markets can be leveraged for learning, where critical minerals and location-specific renewables grant negotiating power, and where regional coordination can align local-content, technology upgrading, and export strategies. Second, formidable constraints persist: asymmetric power in trade and finance; multilateral and creditor framings that narrow policy space (e.g., “market-failure–only” logics and fiscal-space conditionality); weak technology transfer despite discursive support for regional value chains; and taxonomy-driven capital allocation that externalizes standards. Four obstacles—policy capture via export financing, scale races in core markets, limited access to transformative technologies, and green taxonomy asymmetries—risk reproducing primarization. The chapter concludes that timing is decisive: without swift, capability-oriented, and regionally coordinated green industrial policies, the Global South may miss a rare chance to couple decarbonization with structural transformation.