Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/301269 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11143
Publisher: 
CESifo GmbH, Munich
Abstract: 
We examine the ways in which political realities shape industrial policy through the lens of modern political economy. We consider two broad “governance constraints”: i) the political forces that shape how industrial policy is chosen and ii) the ways in which state capacity affects implementation. The framework of modern political economy suggests that government failure is not a necessary feature of industrial policy; rather, it is more likely to emerge when countries pursue industrial policies beyond their governance capacity constraints. As such, our political economy of industrial policy is not fatalist. Instead, it enables policymakers to constructively confront challenges.
Subjects: 
industrial policy
political economy
state capacity
embedded autonomy
JEL: 
O25
L52
P00
Document Type: 
Working Paper
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