Industrial Policy and the States

Abstract

The emergence of industrial policy proposals on the national scene raises the prospect of a greater role for the states in American economic policy. Four types of industrial policy proposals are described, each representing a distinctive strategic orientation. After describing the implied role of states in each type, we argue that state involvement is politically necessary if any proposal is to succeed in the national policymaking arena. We assess the four strategic proposals in light of that contention and conclude that two of the approaches—infrastructure investment and subnational jurisdiction proposals—have an advantage over the better known trade policy and sectoral targeting strategies.