3The role of public sector investment Government policies and investments have a key role to play in supporting a manufacturing- driven growth trajectory for countries. While the seven readiness factors outlined in this paper and the sub-indices that underpin them (see Appendix 1) play a crucial role in attracting foreign investment, domestic government investment also helps shape a country’s long-term economic trajectory. A country’s position within the four distinct country archetypes identified in this paper – adapters, connectors, convergers and scalers – is not static. Government policies and investments play a key role in future archetype shifts. There is, however, no one-size-fits-all standard around identifying target archetype, as this will depend on a country’s priorities as well as various other factors. Brazil and India are good examples of countries making concerted efforts to increase the manufacturing contribution to GDP . Both are adapters, but this status conceals a concerted effort from both countries to enhance their value- driven industrial capabilities. Brazil’s government has introduced the Nova Indústria Brasil industrial policy to stimulate technological advancement, boost productivity and enhance competitiveness over the coming decade. Similarly, India’s focus on improving infrastructure and regulatory frameworks, alongside initiatives such as Make in India, reflects an ambition to elevate the role of the manufacturing sector in the economy. Saudi Arabia and the United Arab Emirates have traditionally relied on oil and natural resources, but they too are actively investing in diversifying their economies. Through initiatives such as Saudi Arabia’s Vision 2030 and the United Arab Emirates’ Operation 300 Billion, these nations are channelling significant resources into advanced manufacturing, technology adoption and sustainability. In contrast, scalers such as the US and certain EU nations continue to harness government investment to maintain their advantageous position. The US is reinforcing its leadership in high-tech and innovation-driven manufacturing industries through initiatives such as the CHIPS Act and the Inflation Reduction Act and is boosting supply chain resilience through the Promoting Resilient Supply Chains Act. The EU’s Next Generation EU plan, which emphasizes a green transition and digital transformation, seeks to sustain and enhance the region’s competitive edge in global value chains. These examples illustrate how government investment, while often taking longer to play out in the real economy, remains a critical component in enabling countries to become attractive destinations for manufacturing. As government investments mature, they contribute to a country’s overall economic resilience and attractiveness. This reinforces the notion that a proactive approach to sustained industrial growth can, in many cases, create a favourable environment for the manufacturing and supply chains sector, though some countries may pursue other paths to economic resilience. Beyond Cost: Country Readiness for the Future of Manufacturing and Supply Chains 24

Beyond Cost 2024