COVID-19 presents some leeway for countries to pursue industrial policy on their own terms. However, as crisis conditions dissipate, current economic theory is of little help. Current perspectives range from the almost theological to the overly positivistic. Mainstream economists who have tried to ‘mainstream’ industrial policy in recent times offer simple econometric-centred reasoning that seeks to find cross-country regularities instead of nuanced and real-world application based on a country’s economic history. They apply highly positivistic and proscriptive worldviews claiming industrial policy should reveal latent ‘comparative advantage’. On the other hand, and perhaps equally misguided, heterodox scholars who reclaim the structural roots of industrial policy have anchored it in increasingly irrelevant empirical foundations that would only be useful for countries with already existing manufacturing bases. The latter have opted for the more theological approach that presupposes classical growth as an end of any industrial policy as a positive development. I hope that we seize the chance to encourage a new paradigm for industrial policy beyond narrow prescriptions and dominant worldviews.Read More »
Nobel Laureate 
In recent decades, market-based solutions such as financial inclusion have become more popular in developed countries to reduce inequalities and boost wealth and incomes of the poor. There is no better example of this than the recent thrust of low-income families, women, ethnic minorities, and the young into the subprime mortgage lending expansion in the USA since the early 2000s. Higher access to formal loans for these households was argued to enable them to climb the magical ladder of homeownership and achieve their American Dream. But as we know, the picture didn’t turn out to be quite so rosy. 
Developing Economics 