The mood is changing in favour of industrial policy in the US

Both Democrats and Republicans are seeking new solutions to meet major economic challenges

Just a few years ago, the phrase "industrial policy" was employed mainly as a term of abuse in the US. Economists almost universally insisted that state interventions to improve competitiveness, prioritise investment in strategic sectors and structure market incentives around political goals were backward policies doomed to failure - whether applied in America, Asia or anywhere in between.

The political consensus that had prevailed since President Ronald Reagan, across both Republican and Democratic administrations, favoured free markets, trade liberalisation and deregulated finance. President Bill Clinton, for instance, reduced trade barriers and the regulatory structure around finance as enthusiastically as both Bush administrations.

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A version of this article appeared in the print edition of The Straits Times on August 23, 2019, with the headline 'The mood is changing in favour of industrial policy in the US'. Print Edition | Subscribe