WEBINAR RECORDING · 2022-03
Long Term Effects of Industrial Policy
In this conversation: Jaedo Choi (Presenter); Euijin Jung (Discussant); Ben Shepherd and Hanna Norberg (Moderators)
Korea's heavy-industry drive and a review of US policy episodes illustrate why industrial-policy assessment needs long horizons, explicit objectives and competition. Discussion separates persistent firm growth from modeled welfare and asks how far historical success can guide policy elsewhere.
Session information draws on the recording and its original description. Affiliations and policy context refer to the time of the webinar.
FROM THE CONVERSATION
Three takeaways.
What they mean in practice.
Prepared from the session recording using automatic transcription and editorial review. Follow the timestamp links for the original wording and context.
Temporary support can have persistent effects
Watch 13:22 ↗Choi links government-directed foreign credit during Korea's 1973–79 drive to larger subsequent firm sales. Identification exploits targeted industries and regions among previously located firms. A calibrated model separately attributes long-run gains to financing frictions and learning by doing.
Policy interpretation: Look beyond the subsidy period, separating estimated firm outcomes from model-dependent welfare.
Openness and competitive discipline matter
Watch 28:33 ↗Choi emphasizes imported technology, international sales and export-based performance evaluation. Jung's 18 US case studies assess broad R&D support more favorably than prolonged protection or firm-specific assistance. Different designs suggest attention to intervention form rather than one verdict on all industrial policy.
Policy interpretation: Specify the friction and preserve technology acquisition and competition.
Sales growth is an incomplete success criterion
Watch 47:21 ↗Shepherd questions whether larger firms necessarily become more productive or competitive. Both speakers favor additional measures: exports, technology and costs of jobs saved. Jung raises regional imbalance; Choi distinguishes retrospective success from the policymaker's ex ante selection problem.
Policy interpretation: Set multidimensional criteria before implementation, including costs and distributional consequences.
From the discussion
Questions probe endogenous targeting and unobserved quality. Choi cites unexpected policy, prior firm locations and absent pre-policy differential growth as supporting evidence (39:35–41:41). He acknowledges difficult extrapolation and proposes smaller-scale experimentation (43:30–45:23). For semiconductor policy, he stresses diagnosing the supply-chain friction rather than importing a historical growth objective unchanged (55:57).
