industrial policy


Government policy to influence which industries expand and, perhaps implicitly, which contract, via subsidies, tax breaks, and other aids for favored industries. The purpose, aside from political favor, may be to foster competitive advantage where there are beneficial externalities and/or scale economies.

Use industrial policy in a sentence

Our companies industrial policy will be reflected in the paper work you receive in an email you should receive today.

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Despite existing criticism, there is a growing consensus in recent development theory that state interventions are often necessary when market failures prevail. Market failures often exist in presence of externalities and natural monopolies. These market failures hinder the emergence of a well-functioning market and corrective industrial policy may be required to ensure the allocative efficiency of a free market.

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In my office there is a governmental policy to influence certain industries to expand, which contract via subsidies and tax breaks for favored industries. This industrial policy will help many industries better influence their decision to expand.

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