Generally speaking, economic policy can be clasified into microeconomic and macroeconomic policy. The first category is related to strategies designed and implemented for particular markets or activities, such as agriculture, trade, regional issues and industry. The second, instead, deals basically with policy changes which impact the aggregate demand of the economy, through fiscal and monetary measures, and the agreggate supply, via structural reforms (in this last case macroeconomic policy is intextricably linked to microeconomic policy).
Industrial policy can be described as the set of laws, regulations and measures designed and implemented by legislators and policymakers in order to induce certain outcomes on the organization, operation and output of firms. Thus it belongs to the category of microeconomic policies.
In turn, within industrial policies two main types of approaches can be distinguished: horizontal, intended for the vast majority of firms operating in the economy, and sectoral, specific for particular spheres of the economic activity. Examples of horizontal measures are those covering the following areas: regional, taxation, social, competition and environment. By sectoral measures we usually refer to: industry and enterprise policies, R+D, energy, transport, agricultural and fishery.
In the last 60 years three main types of paradigms have been used in this regard. The first part of the period was characterized by active invervention in the economy, through subsidies, targeted procurement by governments and fostering of mergers and adquisitions. From the 80s onwards, instead, governments opted for a more market friendly approach, oriented towards the removal of obstacles to competition in markets and the consolidation of a favourable environment where firms could operate. While in the first part of the period industrial policy was tantamount to sectoral policies, in the second it has shifted towards horizontal measures.
As a result of the financial and real economic crisis which started in 2007-2008, policymakers have gravitated to a more active behaviour, intended to lend support to some key activities and avoid their collapse.
During this course we shall revise the main features and landmarks of each of these approaches, analyzing their advantages and drawbacks and extracting lessons from their impact both at the microeconomic and macroeconomic level. Although this methodology has a chronological rationale, the combined study of both strategies provides a richer and more thorough analysis. Transport policy will not be covered in this course, however, since it is addressed elsewhere.
Industrial policy and technological policy are very closely linked. In fact, insofar the latter is devoted to increase competitiveness of firms by inducing the adoption of state of the art techniques, it could be considered as a part of industrial policy widely defined. In most of this course we shall follow this approach, in line with many relevant contributions in the field.
