Zones as industrial policy: Lessons for U.S. policymakers from experiments in East Asia

Tempo de leitura: 2 minutos

In recent years, U.S. policymakers have forged an emerging new consensus around the economic, social, and security perils of offshored manufacturing capacity – and a renewed commitment to policy-driven reindustrialization. While these interests are motivated by different policy objectives, both Republican- and Democratic-controlled Congresses and administrations have deployed industrial policy to promote domestic production in strategic sectors. These measures include a mix of broad-based trade measures (e.g., tariffs), sector-specific incentives (e.g., semiconductor or battery manufacturing grants and tax credits), and place-based regional economic development programs (e.g., the NSF Engine and Tech Hub programs). There is also ongoing interest in steering strategic reindustrialization to American communities that have been hollowed by prior decades of offshoring and disinvestment.1 The not-so-subtle subtext behind many of these investments is Washington’s anxiety over the rise of China as the world’s preeminent industrial juggernaut in many of the growth sectors in the 21st century economy – and, increasingly, its transition into a high-tech research powerhouse that now rivals the American innovation engine.2 This has challenged long-held assumptions that China’s export-oriented growth model was built on a foundation of cheap labor and land, and would ultimately sputter before competing in high-quality or high-tech domains with the U.S., or with “East Asian miracle” democracies in the region, like South Korea and Taiwan. The U.S.’s largest infrastructure and industrial policy investments of the past several decades—initiated through laws like the American Recovery and Reinvestment Act of 2009, the Infrastructure Investment and Jobs Act of 2021, the CHIPS and Science Act of 2022, and the Inflation Reduction Act of 2022—have yielded significant achievements. However, they have also revealed how U.S. industrial and building capacity has atrophied, with many programs struggling to deliver completed projects on expeditious timescales. Moreover, the emerging cross-partisan commitment to industrial policy in general has been complicated by domestic political whiplash over industrial policy’s specific focus as applied to priority sectors of the economy (e.g., Trump reversal of clean energy efforts). There is robust debate about other causal dynamics, including “abundance” critiques of procedural sclerosis and NIMBYism, “everything bagel-ism,” aging infrastructure, and high labor costs—not to mention a shortage of industrial knowhow and workforce. 3,4,5