industrial policy

industrial policy, government-sponsored economic program in which the public and private sectors coordinate their efforts to develop new technologies and industries. Government provides the financial support and capital to the private sector by direct subsidies, tax credits, or government-run developmental banks. Industrial policy emphasizes cooperation between government, banks, private enterprise, and employees to strengthen the national economy. In the 1980s and 90s, industrial policies enjoyed some success in Germany and Japan. In the United States, such direct government involvement in business planning has traditionally been viewed with suspicion. However, the Advanced Technology Program, begun in 1990, has been instrumental in the research and development of promising, high-risk technologies. U.S. government subsidies can also be found in such areas as defense, energy, transportation, and home construction.

Bibliography

See R. Reich, The Work of Nations (1991).