The Local Dimension of Industrial Policy

This chapter is about the local dimension of industrial policy. The first question is: has industrial policy a local dimension and what does it exactly mean? We will see that a positive answer may be inferred from some theoretical debates (on market and government failures, their remedies and possible policy answers), and from what we may learn from the history of industrial development with reference to a variety of experiences around the world. Industrial policy with a local dimension does not reduce to intervention promoted by local government. If local governments have a central role in defining and implementing local industrial policy, other institutions can also offer an important contribution in this field, for example the national government policies or the international institutions' interventions. A clearer identification of the local dimension of industrial policy should be related to its focus on local actors and relations: 'local' because rooted in localities indentified by sets of relations within specific communities of people, firms and institutions. A second question concerns the domain of Local Industrial Policy (LIP), here defined as the application of general principles of industrial policy to the organization of industry at the just mentioned level of localities.