Abstract

The subject of industrial policy has recently experienced a renewed interest in both political and economics spheres. Despite pressures for liberalisation from organisations such as the World Trade Organisation, state aids are still widely used throughout the world, showing that some form of industrial policy is still implemented. Hence in this paper we ask whether there is a dominant form of industrial policy adopted today and if yes, what is this form. We examine this question by reviewing eight countries' experience in industrial policy implementation since World War II. This leads us to outline three phases of industrial policy: the interventionist phase from 1945 to the end of the 1970s, the liberal phase in the 1980s and 1990s and what we call the "pragmatic" phase in the years 2000. In the latter phase, industrial policy aims at both ensuring a competitive environment for firms through strong competition policy and independent regulation and orientating the industrial specialisation of the country, promoting the development of new, high tech sectors. Intervention specific to sectors is therefore considered a valid instrument again. We show that the characteristics of today's economy (open and knowledge-based economy) justify the necessity of industrial policies of this form, and we also discuss its foundations in the theoretical literature.