Deep Dive into the concept of partnership-based industrial policy - Part 1: The return of industrial policy

Industrial policy is back.From the U.S. Inflation Reduction Act and CHIPS Act to Europe's Net-Zero Industry Act and China's Made in China 2025 strategy, governments around the world are once again actively shaping markets, supporting strategic industries, and competing for technological leadership.But what exactly is industrial policy? Why has it returned after decades of market-oriented economic thinking? And what does its resurgence tell us about the changing nature of the global economy?In this first episode of a two-part deep dive, I explore the intellectual and political foundations of the new industrial policy era. We examine the shift away from ordoliberal and market-centered approaches, the economic rationale behind government intervention, and the growing focus on economic security, technological sovereignty, supply chain resilience, and strategic industries.The episode covers:• Why industrial policy has returned across the United States, Europe, China, India, and Brazil• The economic theory behind industrial policy and market failures• The evolution from import substitution to modern industrial strategy• The concept of embedded autonomy and state-business cooperation• The main instruments of industrial policy, from subsidies and public procurement to export controls and technology transfer mechanisms• Evidence that governments are increasingly moving beyond purely market-correcting policies• A detailed look at major industrial policy initiatives including the Inflation Reduction Act, CHIPS and Science Act, European Chips Act, Net-Zero Industry Act, Critical Raw Materials Act, Made in China 2025, India's Production Linked Incentive Scheme, and Brazil's Nova Indústria BrasilMost importantly, this episode introduces a central contradiction of our time:While industrial policy is increasingly designed as a national project, the industries it seeks to shape remain deeply international.Understanding this contradiction is essential for understanding the future of economic policy—and it sets the stage for Part 2, where we explore why the next evolution of industrial policy may be partnership-based industrial policy.