Industrial policy under systemic external failure: a framework for survival-oriented policy reconfiguration

This conceptual article develops a framework for industrial policy under systemic external failure, defined as a condition in which externally induced impairments across multiple enabling channels—especially finance, technology access, and trade or logistics—interact to make essential transaction chains materially unreliable. The framework specifies a recipient-side mechanism linking this condition to policy reconfiguration. It distinguishes the transaction-level trigger from a separate mediating condition: the operational reach of conventional industrial-policy instruments, which may remain formally available yet vary in their ability to reach the transactions or activities they are intended to influence. Where instrument reach declines, the feasible policy set narrows and the relative priority of continuity rises at systemically critical and difficult-to-substitute nodes. Survival-oriented reconfiguration places greater weight on minimum systemic functionality, critical dependencies and chokepoints, and production-linked reconstructive measures including alternative settlement arrangements, substitute sourcing and logistics, conditional localization, and cross-agency coordination. Its form and coherence depend on administrative and fiscal capacity, technological substitution capability, and access to alternative external channels. Iran and Russia provide documentary illustrations of the framework rather than causal tests of policy effectiveness. By separating policy reconfiguration from downstream outcomes, the article connects industrial-policy scholarship with economic coercion, resilience, and geoeconomic fragmentation and offers a framework for subsequent empirical testing.