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Are industrial policy instruments effective?: A review of the evidence in OECD countries

Author

Listed:
  • Chiara Criscuolo

    (OECD)

  • Nicolas Gonne

    (OECD)

  • Kohei Kitazawa

    (OECD)

  • Guy Lalanne

    (OECD)

Abstract

While the case for industrial policy is gaining traction across OECD countries, little consensus exists on the effectiveness of such interventions. Building on a new analytical framework for industrial policy developed in a companion paper, this paper reviews the empirical literature on the effectiveness of industrial policy instruments, laying out the knowns and unknowns. Overall, it strongly supports the premise that well-designed economic incentives for firms and good framework conditions shaping the business environment are effective. At the same time, it emphasises the limited and inconclusive nature of the evidence regarding the increasingly frequent targeted and demand-side instruments. Finally, it underlines the complementarities between economic incentives and other interventions such as skill policies or framework conditions, notably competition and trade policies. Framework conditions are indeed key in enabling the most productive firms to grow and an important channel for structural change.

Suggested Citation

  • Chiara Criscuolo & Nicolas Gonne & Kohei Kitazawa & Guy Lalanne, 2022. "Are industrial policy instruments effective?: A review of the evidence in OECD countries," OECD Science, Technology and Industry Policy Papers 128, OECD Publishing.
    • Handle: RePEc:oec:stiaac:128-en
    DOI: 10.1787/57b3dae2-en
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    Cited by:

    1. Anderson, Brilé & Cammeraat, Emile & Dechezleprêtre, Antoine & Dressler, Luisa & Gonne, Nicolas & Lalanne, Guy & Martins Guilhoto, Joaquim & Theodoropoulos, Konstantinos, 2023. "Designing policy packages for a climate-neutral industry: A case study from the Netherlands," Ecological Economics, Elsevier, vol. 205(C).
    2. Dumont, Michel, 2022. "Public support to business research and development in Belgium: fourth evaluation," MPRA Paper 115418, University Library of Munich, Germany.
    3. Pallante, Gianluca & Russo, Emanuele & Roventini, Andrea, 2023. "Does public R&D funding crowd-in private R&D investment? Evidence from military R&D expenditures for US states," Research Policy, Elsevier, vol. 52(8).

    More about this item

    Keywords

    industrial policy; public guarantees; public loans; public venture capital; subsidies; tax expenditures;
    All these keywords.

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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