Industrial policy is back, and nobody agrees on how to measure whether it works
Subsidy programmes have multiplied faster than the frameworks needed to evaluate them.
The short version
Governments across advanced economies are spending heavily to onshore strategic industries, with limited agreement on what success looks like.
A decade ago, industrial policy was a term used mainly in criticism. It is now the organising principle of economic policy across much of the advanced world.
The consensus that formed quietly
Supply chain shocks, security concerns and the energy transition combined to make targeted state investment politically acceptable across the spectrum. Parties that disagree on almost everything else now agree that some production should be domestic regardless of cost.
The measurement problem
The programmes are large, but the evaluation frameworks are thin. Job creation figures capture construction phases better than steady-state operations. Capacity figures say nothing about utilisation. Announced investment is not the same as deployed capital.
- Announced versus completed projects diverge substantially in every sector studied
- Cost-per-job varies by an order of magnitude between programmes with similar aims
- Strategic value is asserted more often than it is defined
If a policy cannot fail by any stated measure, it is not a policy. It is a preference.
What better looks like
Clear objectives stated in advance, published cost-per-outcome benchmarks, sunset clauses, and independent evaluation. None of these are technically difficult. All of them are politically inconvenient, which is why so few programmes include them.
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