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In Defense of Industrial Policy

At a time of rising geopolitical tensions and supply-chain fragmentation – when national-security considerations are shaping economic policy, and the risks of war seem to be intensifying – industrial policy is all but inevitable. The question is how to do it well.

MILAN – Industrial policy has always been a controversial dimension of growth and development strategies in emerging economies. Now, the introduction of the CHIPS and Science Act and the (misnamed) Inflation Reduction Act in the United States has reignited a similar debate in advanced economies. Unfortunately, it’s a debate that often generates more heat than light.