Measuring Industrial Policy: A Text-Based Approach

Réka Juhász, Nathaniel Lane, Emily Oehlsen and Veronica Perez

No 33895, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Since the 18th century, policymakers have debated the merits of industrial policy (IP). Yet, economists lack basic facts about its use due to measurement challenges. We propose a new approach to IP measurement based on information contained in policy text. We show how off-the-shelf supervised machine learning tools can be used to categorize industrial policies at scale. Using this approach, we validate long-standing concerns with earlier measurement approaches that conflate IP with other types of policy. We apply our methodology to a global database of commercial policy descriptions, and provide a first look at IP use at the country, industry, and year levels (2010-2022). The new data on IP suggest that i) IP is on the rise; ii) modern IP tends to use subsidies and export promotion measures as opposed to tariffs; iii) rich countries heavily dominate IP use; iv) IP tends to target sectors with an established comparative advantage, particularly in high-income countries.

JEL-codes: C38 L52 O25 (search for similar items in EconPapers)
Date: 2025-06
New Economics Papers: this item is included in nep-tid
Note: IO ITI POL PR
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