Considering Real Options to Develop an Industry While Implementing Industrial Policy

Roman Melnikov

Journal "Region: Economics and Sociology", 2014, vol. 4

Abstract: The paper considers approaches to evaluate how effective is selective government support for investment projects within state industrial policy. It is hypothesized that using modern concepts of industrial policy, suggested by foreign scientists and oriented towards stimulating the search for new business solutions that diversify the structure of national economy, requires a shift from a traditional model of discounting costs and benefits to a model of evaluating real options while selecting projects and providing government support. We give a characteristic of similarities and differences between a classic real option to expand business, used to prove commercial performance of a project, and a real option to develop an industry, which justifies economic viability of selective government support of certain projects from national economic points of view

Keywords: industrial policy; diversification of economy; government business support; subsidizing of interest expenditures; real options; demonstration effects; indirect effects; national economic and fiscal project performance (search for similar items in EconPapers)
Date: 2014
Note: Regional and Interregional Aspects of Structural and Investment Policy
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Persistent link: https://EconPapers.repec.org/RePEc:nos:regioe:2014-4_10

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