Panle Jia Barwick, Myrto Kalouptsidi, Nahim Bin Zahur, 11 September 2019

Despite the prevalence of industrial policies around the world, few empirical studies directly evaluate their welfare consequences. This column reveals that the scale of China’s industrial policy targeting the shipbuilding industry is massive, with the lion’s share going to entry subsidies. The effectiveness of different policy instruments is mixed, and the efficacy of industrial policy is significantly affected by the presence of boom and bust cycles, and by heterogeneity in firm efficiency. The ‘white list’ of firms chosen for government support did not include the most efficient firms. 

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