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.


The UK and the USA are quite protectionist about agriculture - this might be directly related to voting tendencies in the US and is demanded by the EU CAP for the UK. Historically, England was a free trade nation - both the Irish Potato Famine and the Chinese Opium Wars show the worst side of this. When experimenting with strong 'industrial policy' under Labour governments in the 1960s & 70s, Britain got it spectacularly wrong. Tony Benn's ICL - the 'white hot heat of the technology revolution' is dead and buried.