Industrial policies for the twenty-first century: lessons from the United States

Amid the backdrop of advanced technology competition from China, climate change and a global pandemic, the United States —traditionally averse to industrial policy— embraced major industrial policy programmes between 2020 and 2022. These programmes focused on fostering technology innovation and are prime examples of industrial innovation policy. The scale of these initiatives and their focus on non-defence sectors are unprecedented. This study reviews six major examples of new United States industrial innovation policies involving federal government interventions in post-research phases of innovation, from development to prototyping, testing, demonstration and production. These policies reflect different approaches, for example top-down strategies, whereby the government selects and supports specific companies, and bottom-up strategies, through which the government offers incentives for companies to meet government technology goals. However, gaps remain in areas such as scale-up financing, advanced manufacturing support and cross-agency coordination, although some efforts are under way to address them. While the United States has a highly developed economy, it has been experimenting with industrial policy models that may be relevant to developing nations in their efforts to meet the challenges of the twenty-first century.