Internationalizing industrial policy: how China and the United States use state capacity to secure critical minerals for electric vehicles

Daniel Driscoll, Max Kiefel and Mathias Larsen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Industrial policies are resurging across the world in response to climate change and geopolitical challenges. Current scholarship predominantly argues that state capacity for industrial policy depends on nationally oriented features, such as bureaucratic efficiency, financial resources, and expertise. However, the increasing uncertainties in globalized industrial supply chains mean that today, industrial policies must often expand into other countries to be successful. We propose complementing the domestically oriented dimension of state capacity with an internationally oriented one, drawing from the international political economy literature on state power. To demonstrate the merit of this approach, we analyze China's and the United States’ state capacity and actions to internationalize their electric vehicle industrial policies, in order to secure critical minerals. We find that both countries use their large market shares of global trade, while China leverages its powerful state bureaucracy and the United States its dominant military and macrofinancial regime. Thus, we argue that in order for a country to internationalize its industrial policy, a country must combine market dominance with capacities that are likely to be highly specific to their own comparative advantage.

Keywords: state capacity; industrial policy; international political economy; critical minerals; electric vehicles; climate change; geopolitics (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2026-02-04
New Economics Papers: this item is included in nep-ene and nep-tre
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Published in Politics & Society, 4, February, 2026. ISSN: 0032-3292

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