The Rise, Fall, and Reemergence of Industrial Policy: From Developmental States to Geoeconomic Statecraft

Industrial policy has returned to the center of economic policymaking after decades during liberalization and market coordination defined the dominant policy paradigm. I explain its historical evolution through a political-economy framework in which industrial policy is an institutional response to changing coordination problems associated with structural transformation, technological transition, strategic vulnerability, and systemic uncertainty. The framework separates four analytically distinct links: the material problem, its political selection as an object of collective action, the state capacity and international policy space governing implementation, and feedback from performance, distribution, and cross-border spillovers. The main hypothesis is conditional: changes in production, technology, finance, and geopolitical order alter the coordination problems that become salient, but intervention emerges and persists only when political coalitions authorize a response, institutions make particular instruments feasible, and feedback sustains or revises the policy regime. I use this framework to interpret three broad configurations: developmental industrialization, neoliberal retrenchment, and contemporary geoeconomic statecraft. Climate, artificial intelligence, and the commercial space economy extend the contemporary configuration into technological ecosystems where infrastructure, innovation, security, diffusion, and access to strategic assets are tightly connected.