The Resurgence and Risks of Industrial Policy in the Push for National Champions
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Industrial policy is gaining traction again as countries aim to establish "national champions" in strategic industries like semiconductors. This risks market distortions.
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The "Growth Strategy Trilemma" framework highlights the tradeoffs between economic growth, stability, and national champions.
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Leaders face psychological pressures like "growth anxiety" and "fear of instability" that push them toward picking national champions.
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Industrial policy has worked in some cases like Airbus, but not in others like China's struggles with the COMAC C919 aircraft.
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Industrial policy should be used cautiously as overuse can lead to inefficiencies, distortions, and an unstable global economy over time.