Strategic industrial policies in a global industrial system

Abstract

Abstract What is the most appropriate framework, the most appropriate economic model, for designing an effective industrial policy? This article examines the evolution of both general policy opinion and economic literature related to this issue. After a brief summary of the tools needed in economics for an appropriate framework of analysis, the first section articulates the latest positions in policy opinion along the spectrum from state interventionism to anti‐regulationism. The section then presents the arguments behind the new trade theory and those of complementary theorizations to help us recognize the importance of the new trade theory as a suitable framework in favour of state intervention. The article states, however, that this is not sufficient, and the second section outlines the merits of an emerging systemic approach. It provides insights beyond the scope of the new trade theory which could serve as a foundation for the design of strategic industrial policies in a global industrial system.