Shifting gears: industrial policy and automotive industry after the 2008 financial crisis

Abstract

Apart from being one of the hardest hit sectors during the 2008 financial crisis, the auto sector is also a prominent sector where emerging auto markets such as China have fared relatively well compared to their competitors in North America and Europe. This paper examines various ways that nations have shifted their policy gears to revive and restructure the automotive industry by using the case studies of the USA, France, and China. New sets of policy initiatives are contingent on particular industrial and institutional contexts, but both developed and developing countries have employed wide range of “murky” protectionist measures. This makes it unlikely for the WTO member countries to take a naming and shaming approach and file a case at the WTO level, which poses challenges to the WTO rules and trade liberalization.