The purpose of this chapter is to review how industrial policy developed from mainly a ‘passive’ policy focusing market failures to a mainly ‘active’ policy focusing on creating better conditions for growth and international competitiveness. We have discussed the interpretation of the concept of the industrial policy and followed up that discussion with an overview of the arguments for and against the industrial policy. We have highlighted the the-oretical foundations for industrial policy and illustrated the difference between ‘old’ and ʼnew’ industrial policies. We paid particular attention to ‘spatial’ aspect of industrial policy by discussing whether industrial policies should be place-neutral or place-based. The paper ends with a discussion of the difficulties related to the formulation and implementation of industrial policies.