Mattia Tassinari

Industrial policy and manufacturing targeting in the US: new methodological tools for strategic policy-making

Abstract The economic crisis has pushed several countries to adopt selective industrial policies to promote manufacturing and some selected strategic sectors. Despite this new activism, the process of defining strategic targets risks being carried out with poor rigour on a political level, setting governments up for failure. This paper discusses the notion of strategic sector and proposes a new methodology to increase transparency and effectiveness in the identification of what can be defined as ‘strategic’. Focusing on the analysis of the US manufacturing system, we develop a composite indicator – the Strategic Sector Index (SSI) – to rank manufacturing industries on the basis of their strategic significance. Furthermore, we apply an uncertainty analysis methodology to the SSI to evaluate the robustness of the ranking and to minimise the degree of policy-makers’ discretionality in influencing the results.

Trumponomics Facing a New Global Governance: Is the American Neoliberal Strategy Still Viable?

This chapter traces the essential elements of the American industrial strategy in the neoliberal era, as they emerged in the historical reality of the last 40 years. The main aim of the chapter is to locate the American neoliberal strategy in the recent post-crisis context and to assess the effective possibility for the United States to continue to implement it in the future. In particular, this chapter investigates whether the ongoing global transformations—namely the changes in the distribution of economic power at the international level and in the formal and informal institutional channels of the global order—are limiting the US capacity to adopt a neoliberal industrial strategy.

The Great Recession and Recovery Under the Obama Administration

This chapter presents the main actions taken by the Obama administration as a short-term attempt to tackle the problems raised by the crisis, but also as an effort to restore an effective American industrial strategy by addressing the more structural problems that were affecting the US global leadership. Towards this goal, this chapter describes the actions undertaken by the United States within the American Recovery and Reinvestment Act (ARRA). Furthermore, it analyses other important interventions at domestic and international level, promoted by the American government consistently with the neoliberal industrial strategy that had characterized the previous decades.

The End of the Cold War and the New Neoliberal Order

This chapter outlines the actions and initiatives conducted by the United States at international level during the 1990s, in the context of many areas of high relevance: the establishment of the World Trade Organization, the negotiations for the North American Free Trade Agreement and other important regional agreements, the process of supranational integration in Europe, the economic transition in post-communist countries and structural reforms in developing countries. During these years, the American government played a major role as a regulator, by actively participating in the definition of supranational and international rules. This chapter describes the role played by the United States in shaping the new neoliberal order of the 1990s and the actions implemented in order to take advantage of the changing global system.

Contextualizing the American Industrial Strategy in the Neoliberal Era

This chapter is devoted to contextualizing from a historical perspective the American industrial strategy in the neoliberal era, which has marked the global governance for the last 40 years. The goal of this chapter is to outline the key elements which have characterized the role of the government in the US industrial development before the neoliberal era. This discussion is organized considering three different “American industrial strategies” implemented during the period running from the US independence to the beginning of the neoliberal era: the Hamiltonian Strategy (1791–1861), the Oligopolistic Strategy (1861–1914) and the Keynesian Strategy (1914–1973).

Industrial Strategy During the New Economy

This chapter focuses on the industrial development initiatives implemented at a national level by the US government during the 1990s. The increased stability resulting from the end of the Cold War required the United States to reduce its military expenditures. Concerns about the possible negative impact on the technological and industrial development of the entire American economy of this retrenchment led the government to look for alternative ways to promote innovation. In particular, the Clinton administration was the one that proclaimed a “new approach” to the innovation policy. This chapter describes the main changes in US science and technology policy occurred during those years.

Incubating the Crisis: Bush Junior Back to the Old Economy

This chapter describes the economic conjuncture and the main changes in the American approach to industrial development during the Bush Junior administration. With the rise of China and other emerging economies, the WTO system, as a regulatory framework of the international trade, started to struggle to multilaterally impose its rules. Furthermore, at national level, the election of Bush Junior meant an economic growth driven by military public demand and by a growing public debt, with important spending cuts for some of the major technology programmes. This chapter analyses these changes as the main factors which led to the outbreak of the global financial crisis.

Conclusion: The Illusion of the Economic Power

This chapter concludes the book. In the context of the contemporary global transformations, this chapter poses the question on what the main and more realistic options for future global governance are. Fears, hopes and alternative paths for development and global governance are discussed and suggested. The uncertainty and ambiguity of the contemporary times seem propitious to promote a new international paradigm able to recognize the mutual interests at stake.

The Rise of the Neoliberal Rhetoric: Reaganomics and Its Contradictions

This chapter begins the inquiry on the American industrial strategy in the neoliberal era. It focuses on the 1980s, when in the United States the debate over the necessity to adopt a national industrial policy arose for the first time. In this context, an irruptive neoliberal sentiment took its first steps under President Reagan’s rhetoric. The main questions addressed in this chapter are the following: how actually did the economic role of the government change during this period? Which role did the neoliberal rhetoric of that period play? Why should we care that a possible gap between rhetoric and practice existed? Did the rhetoric itself have any causal impact on policy outcomes? Why would successive governments feel the need of embracing pro-market rhetoric?

Selective Industrial Policy and Strategic Sectors. The Choices of Beijing

The debate over the inefficiencies and risks of selective industrial policies has influenced the agenda of policy actions in many ways and for a long time. It surely has influenced the way governments describe their policy interventions. «Horizontal policies», «enabling technologies», «getting the fundamentals right» are all terms inherited from that debate. Yet, in many cases such debate goes hand in hand with policy practices, around the world, that are de facto selective. Chinas experience of industrial growth is noteworthy for several reasons, not least because it has made a massive use of selective industrial policies. The industrial development guidelines set by the Five-Year Plans are extensively based on the choice of «strategic» or «pillar » industries to be promoted and supported. What remains unclear is the way in which such industries are identified among many. With this paper we want to stimulate a debate on how to improve the government choice of strategic sectors. In the specific case of China, we argue that improving the transparency and the rigour of such choice can be crucial for the national and the local governments to maintain an authoritative position in the transition to a «market» economy. Firstly, we reconstruct the evolution of the strategic sectors identified by the Five Year Plans from the midnineties to the present, highlighting the industries on which the government focused the interest. Secondly, we build a composite indicator to rank the different industries according to their strategic importance in the Chinese economy. We compare the ranking to the list of strategic industries described in the Twelfth Five Year Plan. We find that, by and large, our ranking coincides with the list of strategic sectors of the Chinese government.