Abstract:
In Europe and North America there are increasing calls for an industrial policy that would foster innovation and technological development. The advocates of industrial policy warn that without active government support national firms will succumb to unfair foreign competition and that there will be an irreversible weakening of their technological capacity. OECD countries already spend 2–3% of their GDP on direct subsidies to industrial production, investment and R&D. Is more public spending justified especially now that capital is needed for the reconstruction of Eastern Europe?