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The New Economics of Industrial Policy

Author

Listed:
  • Réka Juhász

    (Vancounver School of Economics, University of British Columbia, Vancouver, British Columbia, Canada)

  • Nathan Lane

    (Department of Economics, University of Oxford, Oxford, United Kingdom)

  • Dani Rodrik

    (John F. Kennedy School of Government, Harvard University, Cambridge, Massachusetts, USA)

Abstract
We discuss the considerable literature that has developed in recent years providing rigorous evidence on how industrial policies work. This literature is a significant improvement over the earlier generation of empirical work, which was largely correlational and marred by interpretational problems. On the whole, the recent crop of papers offers a more positive take on industrial policy. We review the standard rationales and critiques of industrial policy and provide a broad overview of new empirical approaches to measurement. We discuss how the recent literature, paying close attention to measurement, causal inference, and economic structure, is offering a nuanced and contextual understanding of the effects of industrial policy. We re-evaluate the East Asian experience with industrial policy in light of recent results. Finally, we conclude by reviewing how industrial policy is being reshaped by a new understanding of governance, a richer set of policy instruments beyond subsidies, and the reality of deindustrialization.

Suggested Citation

  • Réka Juhász & Nathan Lane & Dani Rodrik, 2024. "The New Economics of Industrial Policy," Annual Review of Economics, Annual Reviews, vol. 16(1), pages 213-242, August.
    • Handle: RePEc:anr:reveco:v:16:y:2024:p:213-242
    DOI: 10.1146/annurev-economics-081023-024638
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    More about this item

    Keywords

    place-based policies; industrial policy;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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