Industrial Policy Under Uncertainty
Term
Industrial Policy Under Uncertainty
Idea Level
Others (theme)
Definition
Industrial Policy Under Uncertainty, as articulated by Yuen Yuen Ang, begins from the distinction between uncertainty and risk: uncertainty does not simply mean unpredictability or calculable risk, but unknown possibilities—both good and bad—that cannot be known in advance. This distinction is especially salient today because simultaneous disruptions make it harder for governments to know which sectors, technologies, or firms will succeed. Under uncertainty, industrial policy should shift from picking winners to discovering them, then tailoring support beyond the usual toolkit of tariffs and subsidies.
Conceptual Distinction
In Ang’s formulation, uncertainty does not mean unpredictability, which firms respond to by delaying investment or hiring. Rather, uncertainty refers to unknown possibilities, including unexpected innovations that are not selected or planned by policymakers.
Sources
Ang, Y.Y. (2026) “Industrial Policy for an Age of Uncertainty.” Project Syndicate. 25 May 2026.
Ang, Y.Y.(2016) How China Escaped the Poverty Trap, Chapter 2
Genealogy
[Paradigm] AIM (Adaptive, Inclusive, Moral) Political Economy
→ [Pillar] Adaptive Political Economy (APE)
→ [Concept] Complex vs. Complicated
→ [Concept] Uncertainty vs. Risk: uncertainty as unknown possibilities, not calculable risk
→ [Concept] Influence vs. Control: under uncertainty, governments should influence adaptive processes rather than control exact outcomes
→ [Application] Industrial Policy Under Uncertainty: industrial policy as discovery rather than preselecting winners
→ [Model] Directed Improvisation: governments create conditions for bottom-up discovery by drawing boundaries, defining and rewarding success, and scaling what works
Quotes
[Uncertainty does not mean risk or unpredictability] We face risks in complicated worlds but uncertainty in complex worlds. Complex systems can evolve and generate uncertainty, that is, possibilities that are beyond the anticipation and planning of agents within the system. Some possibilities are terrible… Yet some possibilities are marvelous, such as scientific breakthroughs… To extinguish uncertainty is to extinguish possibilities, both terrible and marvelous.
— Ang, How China Escaped the Poverty Trap, p. 52
[Industrial policy debate reframed] The debate is not whether governments should intervene—most already do. Instead, the real question is: what can governments do when they do not know in advance what will work? One answer from the World Bank and others is to adapt and experiment. But who could disagree with that? Left unsaid is how exactly governments should enable adaptation.
— Ang, “Industrial Policy”
[Discovering not just picking winners] Under uncertainty, the challenge for industrial policy is not simply picking winners but discovering them. And once they are discovered, it is essential to tailor support beyond the usual toolkit of tariffs and subsidies. [In China] some of the most effective government support in e-commerce came from policies that encouraged traditional industries to integrate themselves into digital platforms.
— Ang, “Industrial Policy”
[Meta-institutions for discovery and innovation] In the 21st century, uncertainty—unknown possibilities—is not a bug, but a feature. Designing industrial policy under such conditions requires more than pivoting away from neoliberalism. It demands a new way of thinking that I call AIM (adaptive, inclusive, moral) political economy. AIM challenges a core assumption of top-down planning: that policymakers know the answers in advance. Increasingly, they do not. But this does not mean helplessness. It means crafting meta-institutions that enable discovery and innovation—which often emerge unexpectedly.
— Ang, “Industrial Policy”
Concept Constellation
Across Ang’s work, Industrial Policy Under Uncertainty consistently co-appears with the following concepts and analytic themes: