Odd Lots This Is How Industrial Policy Can Go Bad
51 snips
Sep 26, 2024 
Vivek Chibber, an NYU sociology professor and author specializing in development, dives into the complexities of industrial policy. He highlights current US efforts in clean energy and semiconductors, questioning their effectiveness. Chibber discusses the political conditions necessary for these policies to succeed, warning about the risks of monopolies and lack of competition. He contrasts successful cases like South Korea with the hurdles faced in India, emphasizing the delicate balance between state support and market dynamics.
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Examples of Successful Industrial Policy
- Japan, South Korea, Taiwan, and post-WWII France are widely considered successful examples of industrial policy.
- These countries strategically intervened in their economies to promote specific sectors.
Moving Up the Value Chain
- Successful industrial policy often involves rejecting comparative advantage and moving up the value chain.
- This requires protecting domestic producers with tariffs and incentivizing investment in higher-growth sectors like automobiles and capital goods.
Balancing Subsidies and Competition
- Industrial policy can create unproductive monopolies without market competition.
- Successful policies combine subsidies with enforced competition, like requiring success in export markets, as seen in East Asia.
