"Industrial policy had never left, but the intellectual discourse had left, and the intellectual discourse is back,” stated Nobel laureate and Columbia University Professor Joseph Stiglitz at the second installation of the New Thinking in Industrial Policy: Perspectives from Developed and Developing Countries conference. The conference, which was held from Nov. 1-2, 2024, was hosted by the Firms & Industrial Policy Idea Lab of the Center for Political Economy, the Initiative for Policy Dialogue, the Center for Development Economics and Policy, and the Institute of Global Politics.
The Global Resurgence of Industrial Policy
Over the course of the two-day conference, leading researchers considered how governments across the globe are increasingly seeking industrial policy interventions to address the challenges and opportunities of the 21st century. From the Americas to Asia and Europe, countries are turning towards industrial policy to tackle urgent issues like supply chain vulnerabilities, climate change, and technological competition and to promote innovation, secure industries, and meet national security goals. But this resurgence is raising the question: Can industrial policy balance national interests with global economic integration?
U.S. Industrial Policy Revamping for the 21st century
On the first day of the conference, attention was given to today’s revamped U.S. industrial policy, which has focused in large part on technology, workforce development, and national security. During her keynote address, Alondra Nelson, Harold F. Linder Professor at the Institute for Advanced Study and former deputy assistant to President Biden, provided the example of the 2022 CHIPS and Science Act, an act which supports the revitalization of semiconductor manufacturing and secures supply chains critical to national security. Furthermore, Dr. Hussan Khan, director of Economic Security at the CHIPS program office, stressed the importance of generating industrial policy that aligns economic goals with national security priorities. For example, the CHIPS and Science act created 642,000 manufacturing jobs from 2021-2022.
Race for Supremacy in Technological Innovation
The global race for technological supremacy in sectors such as semiconductor manufacturing was also probed during the first day of the conference. Jeff Thurk from the University of Georgia noted the dynamic competition in semiconductor manufacturing between the Taiwan Semiconductor Manufacturing Company (TSMC), the current global leader in said manufacturing, and China. Likewise, the competition between the U.S. and China in high-tech sectors is rapidly reshaping global trade dynamics. Harvard Postdoctoral fellow Philipp Barteska from Harvard later stated that effective industrial policy hinges on a country's ability to innovate in key technologies.
Europe’s Transition
On the second day of the conference, panelists discussed Europe’s economic transition from a largely neoliberal free-market arena towards the adoption of increasingly interventionist industrial policies. However, during a panel discussion on green industrial policy, Kathleen McNamara from Georgetown University mentioned the European Union’s limited fiscal power as an obstacle to its ability to implement industrial policy goals, particularly in sectors like renewable energy.
Lessons from Asia
Another focal point of the conference was the success of Asian countries such as South Korea and Taiwan in transforming their economies from low-wage manufacturing centers into high-tech innovation hubs, which offers valuable insights for Latin American development. During her talk, University College London’s Mariana Mazzucato attributed Asia’s success in industrial policy to state-business partnerships and decentralized networks, particularly in sectors such as electronics and semiconductors. Latin American countries could potentially aim to replicate this kind of government-industry collaboration in order to avoid the "middle-income trap" and build resilient domestic industries that can compete in the global market.
Significance of service jobs
During his keynote address, Dani Rodrik, Ford Foundation Professor of International Political Economy at Harvard’s Kennedy School of Government, stressed that modern industrial policy must prioritize the creation of good jobs, particularly in the services sector, and should focus on labor-friendly technologies that boost productivity in lower-skilled sectors. Rodrik pointed to the success of South Korea, where technological innovation in manufacturing continues to drive growth even as manufacturing employment declines.
Where are we headed?
The "New Thinking in Industrial Policy" conference centered the re-emergence of industrial policy as it relates to broader shifts in global economic dynamics. As Professor Stiglitz and other scholars asserted, industrial policy must promote both national interests and inclusive and equitable growth going forward, particularly on issues like climate change, trade, and technological innovation. As nations like the U.S., China, and those in Europe and Latin America reimagine industrial policy, the question remains: Can countries build a new economic framework that allows for inclusive growth while ensuring global cooperation? The future of industrial policy will depend on the success of nations in navigating these competing priorities.