The Political Foundations of Industrial Policy: Emergence, Endurance, and Exhaustion

Lottie Field, Réka Juhász and Michele Zampa

No 35802, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how politics shapes industrial policy through two paradigmatic twentieth-century cases: the Cassa per il Mezzogiorno in Italy (1950–1984) and Kennedy's Moonshot in the United States (1961–1972). Drawing on historical and primary political sources, we show that each policy originated in a broader political project rather than in an economic diagnosis: the Christian Democrats' pursuit of national integration and democratic consolidation, and Kennedy's New Frontier. We introduce the concept of industrial policy vision - a publicly articulated, transformational objective that political leaders attach to a set of ideals and pursue through state-led intervention in the economy - and develop a five-component definition that makes it empirically tractable. We then trace each vision through decades of newspaper coverage, combining topic modeling and sentiment analysis with systematic close reading. In both cases, public debate proceeded largely within the frame the vision set, granting the policies tolerance for setbacks and expense. The cases diverge in their fates: the Moonshot's bounded vision was redeemed on schedule, while the Cassa's open-ended vision was exhausted by accumulated failure and the policy outlived it only briefly. This divergence points to our central conclusion: while a vision holds, it sets the terms on which an industrial policy's performance is judged, including what counts as failure and how much time the policy is given to deliver.

JEL-codes: D78 L52 N42 N44 (search for similar items in EconPapers)
Date: 2026-09
New Economics Papers: this item is included in nep-his and nep-pol
Note: DAE ITI POL
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