Why it is Difficult to Implement Industrial Policies: Lessons from the Synfuels Experience

Abstract

An example of a recent effort to initiate and sustain a strongly interventionists, long-term industrial policy is the U.S. Government9s synfuels program. In this case, increased opportunities for business gain were offset by government-erected barriers to business development. The complexities of political coalition building and inter-business rivalry also hindered the progress of the program. General lessons to be learned are that changes in market forces, the tendency of both government and business toward fragmentation, and design problems can make this type of industrial policy hard to establish and implement. In the absence of a lasting crisis which mobilizes a large segment of the population or a profound change in market forces which has the effect of realigning business-government relations, the systematic pursuit of such long-term industrial policies is not likely.