Industrial policy: evidence
There is so much talk about industrial policy, but what does the evidence actually show?
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My hometown, Arica, in the north border of Chile was an industrial city in the 60s-70s during the craze of Raul Prebish theories, with hundred of electronic and car assembler plants, Arica in those years was a sort of "poors man Silicon Valley" with lot of prosperity, but it turns into a tragedy for the city in the long run. The "industries" only worked with the high subsidy of the huge taxes for imports in all Latin America, firms was increasingly inefficient but very profitable for the owners. Chile was the first country in Latin America to open to the international trade and fron the more than 300 industries only 2 survived, now the industrial neighborhood is a cementery of big lots and builds empty or used for storage. The craze of "industrializacion" sent bad signals everywhere: people studied careers that no longer was needed, businessman get accustomed to live with subsidies and every day claim that "Arica is dying because the Government don´t help", it was the worst public policy and the bad consequences lasted decades.