Contemporary Industrial Policy in North America Navigating Economic Transition

Friday, 3 July 2015: 2:15 PM-3:45 PM
TW2.3.01 (Tower Two)
Dan Herman, Balsillie School of International Affairs, Waterloo, ON, Canada
This research paper studies the reaction of mature industrial states, and in particular sub-national levels of state, to the processes of economic and political transition underway in the global political economy that are increasingly democratizing the pursuit and capture of innovation-oriented economic sectors. To do so, this paper reviews the economic policies undertaken in four North America states and provinces in an attempt to better understand the political economies of contemporary industrial policy.

The paper focuses the analysis on the concept of economic transition, and how states, in this case sub-national levels of the state, respond to relative changes in economic competitiveness. This process of transition is identified as the product of both domestic and international forces. The latter driven by the rise of competitive economic actors in so-called emerging economies. What follows is an analysis of how the state acts, reacts and strategizes the development and facilitation of new industrial sectors in the face of these broader changes to the competitive balance between state.

Here the focus is on “innovation” and “innovation-oriented sectors” that are viewed as the likely harbingers of future employment gains. From a practical standpoint, this paper utilizes a primarily qualitative approach to answer a series of questions. Namely, what are the drivers of economic activism amongst states at the sub-national level? How is competition understood? From where, geographically, does it emanate? Subsequently, how do policy makers explain their economic activism? And finally, how do stakeholders from across related areas explain and/or justify their attempts to garner industry support?

This practical approach to understanding the role of the state is complemented by a theoretical analysis that juxtaposes these empirical case studies against contemporary theoretical contributions on the role of the state in the economy. Does Cerny’s Competition State translate in practical terms? And if so, how?  Has a “raison du monde” really replaced a “raison d’etat”?  With similar nuance, does Jessop’s understanding of a Schumpeterian Workfare State withstand scrutiny in the jurisdictions studied? Ultimately the paper seeks to explore the varied forms and features of political economy and industrial relations in the North American jurisdictions studied.

The paper opines that while the language of industrial policy has largely faded from popularity, increasingly competitive international marketplaces for innovation and high-value job creation have allowed states and the policy makers and politicians that direct them to re-assert the role of the state in the contemporary innovation economy.  Thus while Pack and Saggi (2006) may observe that “(f)ew phrases elicit such strong reactions from economists and policy makers as industrial policy,” and others argue that “the best industrial policy is none at all” (Becker 1985), this research will highlight its continued presence albeit in nuanced and sometimes stealth form that often obfuscates this activist role.