4.4 Industrial policy

Individual activity: Promises and pitfalls of industrial policy

Many governments have had industrial policies or strategies favouring specific industrial sectors. Interventions have ranged from direct ownership to a wide range of other supports such as tax benefits, subsidies, export support and export zones, infrastructure investment and guaranteed markets.

Read the following three papers about the role and effectiveness of industrial policies.

• ‘Industrial policy in Europe since the Second World War: What has been learnt?’ by Owen, G., ECIPE Occasional paper, 1. The European Centre for International Political Economy, Brussels, Belgium on the LSE website.
• ‘Industrial Policy for the Twenty-First Century’ by Dani Rodrik on the SSRN website.
• ‘Industrial Policy: Can We Go Beyond an Unproductive Confrontation?’ by Ha-Joon Chang.

Supplementary reading:

Read Paul Seabright’s ‘National and European champions – Burden or Blessing?’.

Group activity: Industrial policies

Should national governments engage in pro-active 'industrial policies'? Why (not)? Discuss on the Trade and policy forum.

Optional activity: Quick test

Answer the short self-marking multiple choice questions in the International trade quiz here.