From Industrial Policy to Innovation Strategy: Lessons from Japan, Europe, and the United States

In response to today’s economic challenges—particularly managing the Covid-19 pandemic and the rise of China—prominent U.S. policymakers and political figures on both sides of the aisle, as well as business leaders, have called for more active government efforts to boost domestic production and innovation. However, there is significant disagreement about how to do so.

This report focuses on the role of government in supporting innovation in critical technologies, although there are other challenges—notably Covid-19—where greater federal intervention could be appropriate. To help further the discussion, we reviewed historical approaches to industrial policy in three advanced democracies: Japan, Western Europe, and the United States. Reflecting on those experiences, we present in this report a set of ten “first principles” intended to guide a more active U.S. innovation strategy to reaffirm the country’s leadership in critical technologies. 

This report was made possible through the generous support of Alcoa Foundation and JETRO.

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Dylan Gerstel

Dylan Gerstel

Research Associate, Economics Program