This book advocates a coherent and comprehensive industrial policy for the United States. So it must deal with the dominant view of most US economists, policymakers, journalists, and citizens that industrial policy has not worked and cannot work. It does this step by step:
​PART I: THE UNDERLYING ECONOMICS
Chapter 1, Why the Free Market Can’t Do Everything, explains why free markets, although crucial, cannot deliver prosperity on their own, and why a new kind of "markets plus" economic thinking is needed to design industrial policies that can.
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Chapter 2, The Dynamics of Advantageous Industries, spells out the nature of the “advantageous” industries that industrial policy should target, the industries with the highest wages and profits and the scale, dynamism, and synergies to drive the entire economy forward.
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Chapter 3, The Industrial Policy Tool Kit, describes the 26 tools governments worldwide, including the US, have used to implement industrial policy to acquire and retain the most desirable industries and economic activities.
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Chapter 4, Trade, Currencies, and Industrial Policy, explains how international trade, including comparative advantage, foreign exchange rates, and tariffs, presents the US with threats and opportunities that only serious industrial policy can manage.
​PART II: COUNTRY CASE STUDIES
These studies:
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Explain the principles, practices, successes, and pitfalls of industrial policy worldwide over many decades.
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Document how industrial policy has driven rapid, high-quality economic development using the same basic principles in countries with widely differing cultures and governments.
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Illustrate the many ways industrial policy must address a nation’s stage of economic development, its political structure, the sophistication of its industries, and the trade and exchange-rate policies of other countries.
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Show that industrial policy failures are not due to unknowable causes, nor to the very idea being misguided, but to readily comprehensible errors that the US can choose to avoid.
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Rebut critics who argue that industrial policy has never truly succeeded or, where its success is undeniable, that it is due to a culture or political structure so different from ours that America should not even bother to try.
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Each country chapter conveys the above ideas in a different way:
Chapter 5, Japan, describes an outstanding case of successful, proactive industrial policy, the first that attracted American attention, and introduces the all-important Asian economic model.
Chapter 6, Korea, discusses an industrial policy derived from Japan’s, showing how industrial policy has been transmitted around the world as a practitioners’ tradition, rather than a theoretical doctrine.
Chapter 7, China, explores how that country’s extremely proactive, systematic, and aggressive industrial policy ups the ante to a full-blown economic challenge to the US. Geopolitics, national security, and technological warfare enter the narrative here.
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Chapter 8, Germany, extends the book's model beyond East Asia and introduces the idea of indirect, multilevel industrial policies, which is more suitable for American imitation than the explicit, centralized East Asian approach, .
Chapter 9, France, because that country’s record of both success and failure, despite having all the ingredients for success, is so revealing.
Chapter 10, Britain, is the book's first example of a systematically unsuccessful industrial policy, chosen because Britain's familiarity to Americans makes its travails easy to grasp.
Chapter 11, India, is another failure case and a Third World example to show that the book's theory applies to radically different societies and levels of development. It is also a revealing contrast with China.
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Chapter 12, Argentina, is discussed because its decades of catastrophic industrial policy failures give a sharp, readily understood picture of what not to do. This book is very realistic about the pitfalls of bad industrial policy.
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PART III: THE FORGOTTEN HISTORY
Chapter 13, The Renaissance Origins of Industrial Policy, explains the forgotten, centuries-long, multi-continental record of industrial policy successes.
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Chapter 14, America 1750–1865, shows how, contrary to prevailing myth, the US was founded as protectionist nation and used industrial policies to develop economically.
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Chapter 15, America 1866–1939, discusses the period from the Civil War to the Great Depression, showing how industrial policy lifted America from an agricultural backwater to the greatest economic power in world history.
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Chapter 16, America 1940–1973, explains how the US abandoned its successful heritage of protectionism and, due to the Cold War, undertook massive governmental support for technology development.
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Chapter 17, America 1974–2007, describes how the US misdiagnosed its growing economic problems and, instead of returning to sound trade and industrial policies, chose increasingly extreme free-market strategies.
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Chapter 18, America 2008–Present, tells how Obama tried, but failed, to fix these problems by doubling down on free-market policies, and how Trump challenged this consensus, breaking new ground that Biden then built on.
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PART IV: INNOVATION AS A SYSTEM
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These chapters show that the US already has quite a lot of effective industrial policy, even if not recognized as such, supporting the idea that the US can design and execute coherent industrial policy. And they highlight deficiencies of America’s current innovation system that need fixing.
The detail in these chapters makes clear the scope, diversity, and mechanisms of existing programs. These chapters show how innovation is not a one-size-fits-all process, but requires institutions tailored to the needs of specific industries and contexts.
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Chapter 19, Governmentally Supported Innovations, provides striking counterexamples against the widely held belief that almost all innovation comes from the private sector.
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Chapter 20, Federal Science and Technology Programs, describes the most established, least controversial, most widely understood federal programs supporting innovation.
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Chapter 21, Federal Proactive Innovation Programs, turns to the lesser known, more controversial institutions that exemplify what the authors would like to see happen, as opposed to what already exists.
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Chapter 22, Industrial Policy for Advanced Manufacturing, looks at advanced manufacturing to elucidate the key battlefield where international innovation rivalry will play out in American manufacturing.
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Chapter 23, Micro-governance of Industrial Policy, examines the organization and management of day-to-day operations of industrial policy agencies for innovation and its commercialization, the nuts-and-bolts of how to make these programs work.
Chapter 24, The Crisis of the American Patent System, describes the sharp, but largely unrecognized, decline of America's once world-leading patent system, which will be a major negative for US industrial policy unless reversed by the proposed reforms.
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PART V: INDUSTRY CASE STUDIES
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Chapter 25, Automobiles, introduces the reader to what failed US industrial policy looks like on a multi-decade, industry-specific level that, thanks to EVs, has renewed urgency today.
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Chapter 26, Semiconductors, Aviation, and Space, covers military industrial policies in the three industries in which the post–World War II US has had the most success at industrial policy, and how America can apply such strategies to its civilian economy.
Chapter 27, Robotics, describes the superior scale and sophistication of foreign industrial policy in an industry that is already important and will only become more so, not only for the economy but also for national security.
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Chapter 28, Nanotechnology, shows how much technological “wide open space” there is for new industries and new industrial policies, which must constantly change to keep up with technological progress.
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PART VI: CLUSTER CASE STUDIES
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Chapter 29, The Massachusetts Life Sciences Cluster, features a state-level industrial policy success story and a good illustration of how to tailor policies to the characteristics and needs of the industry being supported.
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Chapter 30, The Upstate New York Semiconductor Cluster, shows how successful state-level policies require many different players and, ultimately, support from Washington: Localities are critical players, but cannot go it alone.
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RECOMMENDATIONS
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Here are dozens of specific policy implications, covering everything from the tax code to geopolitics. Some are large and some are small. Some are within easy political reach, while others will be very controversial. Some are aimed at solving the problems of the immediate present, and others at America's long-term economic strategy, looking out 50 years or more.​​​​​