Are industrial policy instruments effective?: A review of the evidence in OECD countries

Chiara Criscuolo, Nicolas Gonne, Kohei Kitazawa and Guy Lalanne
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Chiara Criscuolo: OECD
Kohei Kitazawa: OECD
Guy Lalanne: OECD

No 128, OECD Science, Technology and Industry Policy Papers from OECD Publishing

Abstract: While the case for industrial policy is gaining traction across OECD countries, little consensus exists on the effectiveness of such interventions. Building on a new analytical framework for industrial policy developed in a companion paper, this paper reviews the empirical literature on the effectiveness of industrial policy instruments, laying out the knowns and unknowns. Overall, it strongly supports the premise that well-designed economic incentives for firms and good framework conditions shaping the business environment are effective. At the same time, it emphasises the limited and inconclusive nature of the evidence regarding the increasingly frequent targeted and demand-side instruments. Finally, it underlines the complementarities between economic incentives and other interventions such as skill policies or framework conditions, notably competition and trade policies. Framework conditions are indeed key in enabling the most productive firms to grow and an important channel for structural change.

Keywords: industrial policy; public guarantees; public loans; public venture capital; subsidies; tax expenditures (search for similar items in EconPapers)
JEL-codes: L52 L53 O25 O38 Q58 (search for similar items in EconPapers)
Date: 2022-05-03
New Economics Papers: this item is included in nep-ent, nep-ind, nep-ino, nep-reg and nep-tid
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:stiaac:128-en

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