Selective industrial policy and ‘sustainable’ structural change. Discussing the political economy of sectoral priorities in the US

Abstract

With the 2008 economic crisis–and again with the outbreak of the coronavirus emergency in 2020–industrial policy has explicitly reappeared in the political agenda of many countries and regions. A common feature has been the demand and the adoption of selective policies aimed at promoting specific targets of the economy, such as particular industries, technologies, companies, or territories. Nevertheless, the theoretical framework adopted to legitimize and implement public action in this field has not evolved much in the last two decades: it appears weak, too vague, and often anachronistic, increasing the risk of substantial ‘government failures’. By focusing on the US manufacturing system, this paper contributes to the political economy stream of the industrial policy literature by proposing new methods to make government intervention more effective, efficient, and oriented towards a sustainable structural change, as defined in the paper.