Industrial policy refers to selective and targeted efforts by government to influence productive outputs in various sectors. Calls for expansive industrial policy measures have multiplied in recent years. When governments seek to influence future industrial outcomes, they run the risk of squandering societal resources on risky bets better left to private companies and investors. What is the opportunity cost of picking state champions? Who is making sure that the outcome is greater, or at least equal to, the massive costs to taxpayers? And do bureaucrats really make better bets than private investors?
Mercatus research considers how these trade-offs are often ignored in debates over industrial policy and outlines alternative ways to boost economic growth without top-down, technocratic planning.