The Textbook Case for Industrial Policy: Theory Meets Data

Dominick Bartelme, Arnaud Costinot, Dave Donaldson and Andrés Rodríguez-Clare

Journal of Political Economy, 2025, vol. 133, issue 5, 1527 - 1573

Abstract: The textbook case for industrial policy is well understood: sectors with relatively large external economies of scale should be subsidized at the expense of other sectors. Little is known, however, about the magnitude of the welfare gains from such interventions. We develop an empirical strategy that leverages commonly available trade data to estimate sector-level economies of scale and, in turn, to quantify the gains from optimal industrial policy in a general equilibrium environment. Our results point toward significant economies of scale across manufacturing sectors but gains from industrial policy that are hardly transformative, even among the most open economies.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1086/734129 (application/pdf)
http://dx.doi.org/10.1086/734129 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/734129

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().