The Foundations of Industry Policy

Abstract

When economists turn their attention from theoretical work towards problems of public policy they often become schizophrenic. In theoretical work, careful attention is paid to the logical derivation of conclusions from initial assumptions. These same theoretical models then become the found­ation for policy prescriptions, with little thought as to their real world relevance.

When we come to industry policy, … It is true to say that academic economists still attend conferences in the hope that they might acquire a clearer view of what it really consists of and of course, in fairness, what rationale if any lies behind it. D. Swann (1983, p. 3).