The Allocation of Public Resources in the Post- Covid-19 Era: New Challenges for Industrial Policy

The Covid-19 pandemic has further triggered new trajectories of structural change, while fuelling the debate on legislative bargaining and the distribution of scarce resources. In this complex scenario, industrial policy has reappeared in the agenda of several countries as a key tool to tackle the process of accelerated change. Industrial policy should not only select tools, sectors and economic targets, it should also include the evaluation of societal goals and the principles of legality and democracy. However, several governments are attempting to both centralise power and speed-up decision making, thus by-passing the rule of law. Drawing on a selection of experiments on legislative bargaining, the aim of this paper is twofold. First, the paper proposes an extension of the experiment of Fréchette, Kagel and Lehrer (2003), to further understand how open and closed amendment rules impact on the behaviour of proposers and voters, when it comes to take urgent actions in a distributive model. Second, the proposal aims to contributing to the debate on industrial policy as a tool to govern structural change, by providing empirical evidence to support the adoption of open amendment rules and the inclusion of societal goals in the legislative bargaining process of industrial policies and resource allocation. Policy implications are presented from both the international and the national standpoint, by focusing on the Italian National Recovery and Resilience Plan (nrrp).