A nation’s industrial strategy consists of state interventions to support specific industries that are deemed strategically important. Such policies can help to correct externalities and coordination failures as well as provide key public goods. One example is the investment made by the Department of Defense’s research and development organization, the Defense Advanced Research Projects Agency (DARPA), in the experimental computer network ARPANET – the precursor to the internet – in the late 1960s. The undertaking was too costly, risky, and uncertain for any private sector actor to undertake. But once in place, companies joined in and the internet as we know it is the result. The theoretical and empirical economics literature on industrial strategy is still underdeveloped, not least because the Washington Consensus that emerged during the 1980s favored free-market policies and limited government interference as drivers of economic growth. Times have changed, however, with recent geopolitical challenges pushing industrial strategy back into the foreground of economic policy discussions worldwide. A growing body of empirical research suggests that well-designed industrial strategy can effectively drive economic growth, while ongoing studies explore why particular types of policies function better in some settings than others and how industrial strategy has changed over time. At the field’s forefront are early-career scholars Reka Juhasz (University of British Columbia) and Nathan Lane (University of Oxford).  Together, they founded the Industrial Policy Group (IPG), an international empirical economics lab devoted to this topic.  The IPG uses large-language models to classify policies in ways that enable cross-country comparison and rigorous econometric analysis. They plan to publish their comprehensive, granular, and standardized dataset and demonstrate its usefulness in proof-of-concept research on how industrial policies are used around the world. They will also complete at least four other projects, including a descriptive paper on the political economy of industrial strategy; a methods paper on measuring industrial policies from news text; and two evaluation papers on the efficacy of industrial strategy in East Asia after World War II and globally after the year 2000.  The PIs’ demonstrated commitment to fostering a highly diverse, inclusive, and collaborative culture will also ensure that a growing number of graduate students will receive high-quality mentorship, training, and co-authorship through their involvement in these projects.

J-PAL North America (J-PAL NA), established in 2013 with Sloan support, is a regional branch of the Abdul Latif Jameel Poverty Action Lab, a global network of scholars who employ randomized control trials (RCTs) to evaluate policy interventions. In the decade since its founding, J-PAL NA has tested hundreds of interventions to improve the lives of low-income Americans and make government work better for all. Researchers associated with J-PAL NA have, for example, used RCTs to investigate the causes and consequences of discrimination, revealing potential levers for reducing racial disparities in settings such as healthcare delivery, education, and the criminal justice system. More such work is needed, though, as federal, state, and local governments are demanding rigorous evidence on how to increase racial equity through their programs, services, and budgetary decisions. J-PAL NA proposes to expand its infrastructure to support more RCTs on racial equity under the guidance of its newly appointed Racial Equity Advisory Committee. In addition to helping revise the organization’s project selection criteria and develop new resources to empower researchers with early-stage projects to apply for support, the Committee will publish a cross-disciplinary literature review that identifies theoretically grounded interventions in need of rigorous testing.  Examples include RCTs that explore the drivers of and solutions to structural racism as well as RCTs that examine ways to inspire behaviors that improve racial equity among groups holding power. Concurrently, J-PAL NA will launch its first targeted initiative for RCTs on racial equity, disseminating the call for proposals broadly and purposefully to increase the diversity of applicants.  It will publish guidance on new application requirements – for example, providing overviews of stratification economics and theories of race and discrimination.  They will also offer researchers skills-building sessions on proposal writing and on the practicalities of running a rigorous field test.

Due to global challenges such as the COVID-19 pandemic, supply chain disruptions, and geopolitical tensions, the United States is once again adopting explicit industrial strategies.  This follows a long period where free-market policies were primarily favored instead. With the passage of the CHIPS and Science Act and the Inflation Reduction Act (IRA), the National Science Foundation (NSF), the Commerce Department, and other federal agencies are receiving billions of dollars to support the nation’s competitiveness in critical industry sectors and seeking academic expertise to help them spend it wisely. Columbia University’s Initiative for Policy Dialogue (IPD) was launched in 2000 by Nobel Prize winner Joseph Stiglitz. It is a global network of economists, political scientists, and research centers whose mission is to produce high-quality research and translate it into practical guidance for policymakers.  The IPD now has specific plans to establish a high-profile program for novel research on industrial strategy. One prominent IPD expert is Co-PI Eric Verhoogen, who is evaluating the impacts of different types of industrial strategy – to incentivize product innovation; to increase exports; to improve the allocation of government grants for startups; and to encourage the adoption of energy efficient technologies – through ongoing large-scale experiments . Another is Co-PI Martin Guzman, the former Minister of Economy in Argentina, who serves as IPD Co-President alongside Stiglitz.  Together, Stiglitz, Verhoogen, and Guzman will run an academic program to answer foundational questions about why, when, and how to use industrial strategy. Other major grant activities include two international conferences as well as training new experts in this previously neglected field.