On industrial policy and economic renewal

George Kararach ()

Chapter 22 in Liberating Economics From Ideologies and Dystopia, 2025, pp 302-315 from Edward Elgar Publishing

Abstract: Recent experiences in the global economy have shown the vulnerabilities of countries to shocks – from pandemics like COVID-19 and climate change to financial meltdown. Gone are the days for the discussion of the motivations of industrial policy and the attendant debate of whether industrial policy is a good idea or not. There is a greater recognition that industrial policy is undertaken everywhere in the world even if it is not overtly called industrial policy. It is also now widely accepted that industrial policy is a response to market failure just as education policy or health policy are responses to the market's failure to provide the optimal quantity of a service in society. This “normalisation of industrial policy” has allowed development economists to stop focusing on defending and justifying the pursuit of industrial policy (especially in lagging economies). Instead, they can now focus on extant, fine-grained, real world problems facing policymakers operating in difficult situations. Attitudinally they now have the space to view industrial policy design and implementation problems as normal. Through this lens, problems (which will invariably arise) are viewed not as insurmountable, but merely the normal course of business which a sensible policy framework must address to ensure recovery whenever needed and sustainability of a dynamic modern economy.

Keywords: Industrial policy; Economic renewal; Global shocks; COVID-19 pandemic; Climate change and financial crises; Vulnerabilities of countries; Market failures; Policy design and implementation (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035316175
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