Designing American Industrial Policy: General versus Sectoral Approaches

The United States has been searching for a sensible and effective industrial policy since the 1780s. This study, written at the outset of the Clinton Administration, puts forward a theory of the proper industrial policy for any national government to have, especially the US government. The flaw in most proposals for industrial policy is that they are put forward by and seek to gratify uncompetitive rent-seeking industries. Instead, national industrial policy designers should focus on correcting the market failures that impede pro-growth economic performance. General approaches, such as strengthening public infrastructure, are likely to be much more effective than sectoral approaches, particularly tactics such as protectionist government trade policies. National policymakers should also obey the rules of international economic law