The New Economics of Industrial Policy

Réka Juhász, Nathaniel Lane and Dani Rodrik ()
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Réka Juhász: Vancounver School of Economics, University of British Columbia, Vancouver, British Columbia, Canada
Dani Rodrik: John F. Kennedy School of Government, Harvard University, Cambridge, Massachusetts, USA

Annual Review of Economics, 2024, vol. 16, issue 1, 213-242

Abstract: We discuss the considerable literature that has developed in recent years providing rigorous evidence on how industrial policies work. This literature is a significant improvement over the earlier generation of empirical work, which was largely correlational and marred by interpretational problems. On the whole, the recent crop of papers offers a more positive take on industrial policy. We review the standard rationales and critiques of industrial policy and provide a broad overview of new empirical approaches to measurement. We discuss how the recent literature, paying close attention to measurement, causal inference, and economic structure, is offering a nuanced and contextual understanding of the effects of industrial policy. We re-evaluate the East Asian experience with industrial policy in light of recent results. Finally, we conclude by reviewing how industrial policy is being reshaped by a new understanding of governance, a richer set of policy instruments beyond subsidies, and the reality of deindustrialization.

Keywords: place-based policies; industrial policy (search for similar items in EconPapers)
JEL-codes: H25 H41 L5 (search for similar items in EconPapers)
Date: 2024
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Related works:
Working Paper: The New Economics of Industrial Policy (2023)
Working Paper: The New Economics of Industrial Policy (2023)
Working Paper: The New Economics of Industrial Policy (2023)
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DOI: 10.1146/annurev-economics-081023-024638

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