1 Giovanni Federico [New York University, Abu

Transcript:1 Giovanni Federico [New York University, Abu:
1 Giovanni Federico [New York University, Abu Dhabi] Industrial policy: an introduction [CEPR Quantitative history seminar April 9th e 2025] ‘The industrial policy is a set of government actions purposefully directing and supporting specific sectors for economic growth’ (ChatGPT o1, with three interactions) Three key points ‘purposefully’ – a strategy, not a side-effect of other measures. ‘specific sectors’ - change allocation of factors (the adjective refers to manufacturing, but possibly also services) ‘for economic growth’ (or industrialization?) not for welfare A definition NYU ABU DHABI What to study? How do we analysis the causes of industrial policy? How do we assess the effects according to its efficiency – i.e. welfare gains/losses- or to effectiveness –i.e. successin achieving the aim? Three preliminary questions NYU ABU DHABI A super-restrictive definition: an explicit economy-wide strategy for development. E.g. five-year Soviet plans, Muhammad Ali Egypt in the 1820s A restrictive definition: an explicit strategy aimed at favoring one (or more) sector or category of firms (e.g. small ones). An extensive definition: any state intervention which favors one sector or category of firms, even if not explicitly framed in a developmental strategy A very extensive definition: any policy which is bound to favor a sector over the rest of the economy, not necessarily as its main aim v) A super-extensive definition: any measure to “create a landscape” (a legal and istitutional framework), or “modify the environment” (the technology and the markets for inputs and output) for industry Defining industrial policy via its aims (adapted from Federico and Foreman-Peck 1999) NYU ABU DHABI Core Restriction imports– duties (tariffs) and quotas – in theory excluding revenue duties Support to exports with subsidies, loans, information gathering and other promotion efforts Subsidies, tax cuts or soft loans to domestic producers and/or foreign investors Preferences to domestic producers in public procurements Bail-out of domestic producers Additional (incomplete list) - Market exchange manipulation (NTB?) Labor and capital market regulations (NTB?) Competition policy Health regulations (NTB?) Indirect subsidies –e.g. to applied research Defining industrial policy via its tools NYU ABU DHABI Prelude: trade as source of revenue The birth of ‘industrial policy’: mercantilism in Europe, isolation in Asia Diverging trends in 19th century: liberalization trade Europe, free trade in the colonies, protection in the Americas The return to protection in Europe and the catastrophe of the Great Depression The heyday of IP: heavy planning in Socialist countries, the licence Raj in India,