American industrial policy: the rebirth of government intervention

John R. McIntyre and James R. Hoadley

Chapter 4 in A Modern Guide to Industrial Economics, 2026, pp 44-62 from Edward Elgar Publishing

Abstract: Industrial policy has shifted from episodic intervention to a structural feature of modern economic governance. This chapter examines the resurgence of industrial policy in the United States, China, and the European Union, situating these developments within a longer historical and theoretical context. It highlights market failures, learning externalities, and coordination problems as rationales for intervention, while noting risks of inefficiency, capture, and international friction. The discussion moves beyond infant industries to structural transformation, underscoring the state's strategic role in sectors from semiconductors to green energy. Core policy instruments—subsidies, tariffs, procurement, and state aid—are analysed through cases such as the Boeing–Airbus rivalry, climate-linked subsidies, and the CHIPS and Science Act. The chapter also explores governance challenges, from WTO rules to national security exceptions. It concludes that effective policy requires ambition tempered by discipline, transparency, and coordination to foster innovation, resilience, and sustainability in an interdependent world.

Keywords: Industrial policy; Public procurement; State aid; Structural transformation; Subsidies; Tariffs (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035365609
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