Mainstream economics and the Washington Consensus caution against industrial
policies that target sectors, firms and regions. At the most they favour cross-sectoral
policies which address generalised market failures. This paper analyses the success of
an industry-specific policy, South Africa’s Motor Industry Development Programme.
It documents significant learning processes and shows the impact of the sector’s
growth on macroeconomic performance. It also addresses the “costs” of industrial
policy and shows how well-designed scale-enhancing selective policies can provide
domestic consumers with global-quality products at global-price levels, without
subsidy from the exchequer. The Conclusion addresses the relevance of such selective
policies to other developing economies, arguing the case for intelligent and
appropriately crafted industrial policy.