Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
The Political Economy of Industrial Policy
Journal of Economic Perspectives
vol. 38,
no. 4, Fall 2024
(pp. 27–54)
(Complimentary)
Abstract
We examine the ways in which political realities shape industrial policy through the lens of modern political economy. We consider two broad "governance constraints": (1) the political forces that shape how industrial policy is chosen and (2) the ways in which state capacity affects implementation. The framework of modern political economy suggests that government failure is not a necessary feature of industrial policy; rather, it is more likely to fail when countries pursue industrial policies beyond their governance capacity constraints. As such, our political economy of industrial policy is not fatalist. Instead, it enables policymakers to constructively confront challenges.Citation
Juhász, Réka, and Nathan Lane. 2024. "The Political Economy of Industrial Policy." Journal of Economic Perspectives, 38 (4): 27–54. DOI: 10.1257/jep.38.4.27Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- L52 Industrial Policy; Sectoral Planning Methods
- O25 Industrial Policy
- Q54 Climate; Natural Disasters and Their Management; Global Warming
- Q58 Environmental Economics: Government Policy
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