Industrial policy is likely to grow in importance as the world economy fragments, thanks to the rise of protectionism.

It must be recognized that industrial policy seeks to guide the allocation of capital among sectors. Economists will try to understand whether capital allocation guided by the government improves or diminishes growth in factor productivity.

Others will argue that risk mitigation requires a large country to make some important products within its borders. Efficiency is a secondary concern. The tension between these two approaches will always remain at the heart of industrial policy debates.

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