Technology to solve global problems: an emerging consensus for green industrial policy?

Abstract

Even as most mainstream policy analysts support the idea of active industrial policy to create new green industries and cut carbon pollution, important dissenting voices still question whether government intervention is possible without extreme waste. We suggest that many of today’s debates, which echo debates of the 1970s, need updating to reflect the reality that a lot has been learned about where and how government can pursue effective industrial policy. The more transformative the goals, the harder it is to know which policies, technologies and business models will work, and the greater the need for ‘experimental’ approaches to policy that put uncertainty as the centerpiece. Creating industrial transformation in the context of deep uncertainty is the central challenge for industrial policy. Solving this problem requires not just attention to policy design and industrial response but also possible reforms to the institutions that design and implement policies. Today’s policy institutions, like today’s firms, are mostly organized for the current industrial system—not necessarily the future.