In this article for Mint, Dr Niranjan Rajadhyaksha, Executive Director, Artha Global, discusses the importance of setting objective criteria to measure the impact of industrial policy, and its implications on broader economic trends. Excerpts below:
“A senior economist in the Biden administration has written a lucid policy brief to mark the first anniversary of the Inflation Reduction Act. There are four salient points in her note. First, US industrial policy is very tightly focused on three areas: infrastructure, semiconductors and clean energy. Second, the government will intervene with a combination of direct investments as well as incentives for companies.”
“The success rate of 20th century industrial policy is far lower than is commonly assumed. For every South Korea, there is a Brazil. The initial burst of Chinese growth that provided the necessary momentum for that economy came with falling import tariffs and very few sector-specific interventions by the government.”
Read the full article here.
