Industrial policy makes a comeback as advanced economies reconsider state-led growth

Vivek Chibber, speaking on one outlet Radio, outlines the history of industrial policy, from its acknowledgment in a 1990s World Bank report on the East Asian miracle to its decline during the neoliberal wave. He observes that the United States and Europe are now publishing supportive World Bank reports, signaling a revival of state intervention in sectors like semiconductors and AI. Chibber warns that contemporary firms welcome subsidies yet shy away from the regulatory discipline that made past successes possible in Korea and Taiwan.

He stresses that rebuilding the administrative institutions that can monitor and enforce conditions is essential, especially as many such bodies were dismantled in the 1980s. The analyst proposes two routes: using foreign competition to force firms to accept state conditions, or forging a labor-led coalition to tie subsidies to wage and environmental standards. Ultimately, he contends that without political will and effective oversight, industrial policy risks becoming a “nanny state” that socializes risk while privatizing profit.