The article discusses the rise of government intervention in markets by means of industrial policy. Several examples are cited, including a French toymaker, the U.S. government's intervention with automobile and bank bailouts and European involvement in knowledge industries. It is noted that while poorer countries often use industrial policy to help protect nascent industries and to foster growth in certain target sectors, this is not always the case in the West. In recent years, however, industrial policy has enjoyed something of a comeback in the West as well.

For politicians, industrial policy is risky. Some examples have proven successful, while others have proven abject failures that cost significant amounts of taxpayer money. The tradeoff is that some industries are more valuable than others, with respect to either foreign direct investment, jobs or other desirable outcomes for the government. It is noted that while in developing nations industrial policy may be...
[ View Full Essay]