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The return of industrial policies: Policy considerations in the current context

Author

Listed:
  • Valentine Millot
  • Łukasz Rawdanowicz

Abstract

The paper contributes to renewed debates about industrial policy in the context of recent initiatives in several OECD economies. It discusses the pros and cons of industrial policies motivated by environmental, national security and place-based/inclusiveness objectives. The paper also considers implementation and design issues, and how to respond to industrial policies in foreign countries. Despite well-grounded economic, social and environmental justifications for some industrial policies, there are legitimate concerns that the benefits of some of these policies could be limited and the costs high. This mainly relates to measures curbing competition and the practical and political challenges in designing and implementing effective measures. Thus, while governments may want to experiment with future and welfare-oriented industrial policies, they should exert moderation in scope, exercise caution in design and implementation, and be mindful of possible negative international implications.

Suggested Citation

  • Valentine Millot & Łukasz Rawdanowicz, 2023. "The return of industrial policies: Policy considerations in the current context," OECD Economic Policy Papers 34, OECD Publishing.
    • Handle: RePEc:oec:ecoaab:34-en
    DOI: 10.1787/051ce36d-en
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    More about this item

    Keywords

    government subsidies; green transition; industrial policy; innovation; national security; trade policy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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