Competition Policy and Industrial Policy: Time for Reconciliation

Posted by Social Science Research Network

Competition Policy and Industrial Policy: Time for Reconciliation Juan Delgado (Global Economics Group)

Abstract: Industrial policy has a bad name. It is commonly identified with policies directed to prevent competition and to pick winners (or save losers) in a discretionary fashion. The recent economic and financial crises have shown that governments lack of policy instruments to enhance growth and help the economy to recover. A massive amount of state funds have been dedicated to the rescue of troubled banks following in many cases the conventional industrial policy rationale and distorting the competitive level playing field. Not much support is available for the rest of the economy. It is time to rethink industrial policy. The combination of active competition policies and policies directed to the maximisation of positive externalities and spillovers can configure a crisis resilient, growth-enhancing and competition-friendly industrial policy.