2021-10-03-ITIF-Emerging_Industrial_Policy_Approaches_in_the_United_States_37页_495kb

Emerging Industrial Policy Approaches in the United States

Overview

The U.S. federal government is pursuing large-scale, new industrial policies, primarily driven by competition with China, to strengthen technology competitiveness, secure supply chains, and address economic weaknesses. These policies represent an unprecedented expansion beyond traditional defense-related industrial efforts.

Historical Context

Industrial policy in the U.S. has evolved through four main periods: the Cold War era (1950s-1990s), competition with Japan (1980s-2000s), climate change energy initiatives (2000s-2010s), and post-2012 manufacturing revival efforts. Despite economic debates from mainstream economists, these policies aim to improve competitiveness in critical sectors through targeted interventions.

Current Industrial Policy Initiatives

1. Semiconductor Industry

   • Addressing U.S. decline through the $53B CHIPS Act (Creating Helpful Incentives to Produce Semiconductors)
   • Funding R&D, production incentives, domestic supply chain reviews, and workforce development.

2. Endless Frontier Act

   • Allocates ~$100B for research, applied R&D, and semiconductor initiatives to maintain U.S. leadership in advanced technologies (AI, quantum computing, biotech, etc.)
   • Features new applied R&D directorate at NSF, regional innovation hubs, and extended funding for DOE and Commerce.

3. New Energy Technologies

   • Bipartisan infrastructure bill ($1T) funds carbon capture, clean hydrogen, renewable energy, and battery technologies.
   • DOE’s role expanded with ARPA-E, Energy Innovation Hubs, and demonstration programs.

4. Secure Domestic Supply Chains

   • Focuses on pharmaceutical APIs, advanced batteries, critical minerals, and semiconductors.
   • Federal interventions include supply chain mapping, manufacturing incentives, and partnerships with allies.

5. Operation Warp Speed

   • Showcased successful crisis-response industrial policy, combining guaranteed contracts, flexible procurement, and supply chain mapping to accelerate COVID-19 vaccine production.

Key Operational Mechanisms

Industrial policy requires new supporting infrastructure including:

• Talent base in project management, manufacturing, and regional innovation
• Connected research integrating basic and applied stages
• Robust manufacturing foundations and supply chains
• Supply chain mapping and technology testing
• Flexible contracting and technology certification mechanisms
• Financing tools (ITCs, loans, procurement offsets)
• Strong interagency integration and sector-specific partnerships

Challenges

• Implementation gaps persist despite legislative commitments
• Limited manufacturing foundation and R&D-to-production scaling capabilities
• Ongoing debates with traditional economists and efficiency concerns
• Needs for refined operating mechanisms to mature these complex programs

The U.S. government’s sudden, large-scale shift toward industrial policy marks a fundamental policy change, though successful implementation requires building new institutional systems and capacities.