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Industrial policy and the great divergence

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  • Juhasz, Reka
  • Steinwender, Claudia

Abstract

We discuss recent work evaluating the role of the government in shaping the economy during the long 19th century, a practice we refer to as industrial policy. We show that states deployed a vast variety of different policies aimed at, primarily, but not exclusively, fostering industrialization. We discuss the thin, but growing literature that evaluates the economic effects of these policies. We highlight some fruitful avenues for future study.

Suggested Citation

  • Juhasz, Reka & Steinwender, Claudia, 2023. "Industrial policy and the great divergence," LSE Research Online Documents on Economics 121313, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:121313
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    Cited by:

    1. Belloc, Filippo & Lofaro, Antonino, 2026. "Subsidies, new firms, and productivity in global manufacturing," International Journal of Industrial Organization, Elsevier, vol. 104(C).
    2. Ossa, Ralph & Redding, Stephen, 2026. "The Economics of Tariffs," CEPR Discussion Papers 21221, Centre for Economic Policy Research.
    3. Doré, Natalia I. & Araújo, Eliane, 2025. "Long-term analysis of Kaldor's law applied to Brazil (1909-2020)," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 147-157.
    4. 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.
    5. Brian D. Varian, 2025. "Effective Rates of Protection in an Industrialising, Settler Economy: Estimates for Victoria (Australia) in 1880," Economic Papers, The Economic Society of Australia, vol. 44(2), pages 136-146, June.
    6. Grafström, Jonas, 2025. "Vertical industrial policy: principles, practice and potential," Ratio Working Papers 384, The Ratio Institute.
    7. Suesse, Marvin & Grigoriadis, Theocharis, 2025. "Financing Late Industrialization: Evidence from the State Bank of the Russian Empire," The Journal of Economic History, Cambridge University Press, vol. 85(4), pages 1170-1206, December.
    8. Brian D. Varian, 2025. "Effective Rates of Protection in an Industrialising, Settler Economy: Estimates for Victoria (Australia) in 1880," CEH Discussion Papers 02, Centre for Economic History, Research School of Economics, Australian National University.

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    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • N6 - Economic History - - Manufacturing and Construction

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