Editing Industrial policy (section)

== Effects ==
A study conducted by Réka Juhász investigated the economic effect of the [[Continental System|Continental Blockade]] on the [[First French Empire|French empire]]. It concluded that the regions of the French empire which were more protected from trade with the [[United Kingdom]] had an higher increase in mechanized cotton spinning than other regions.<ref>Juhász, Réka. 2018. [https://www.aeaweb.org/articles?id=10.1257/aer.20151730 "Temporary Protection and Technology Adoption: Evidence from the Napoleonic Blockade."] ''American Economic Review'', 108 (11): 3339–76.</ref>

During the 2000s, China had implemented an industrial policy targeting its shipbuilding industry. The policy consisted in subsidizing entry, investment and production. It increased sectoral investment and entry rate by 270% and 200% respectively. It led to the entry of small and less productive firms and created excess capacity. The gain in producer or consumer surplus was lower than the cost of the subsidies. The policy was therefore welfare-reducing.<ref>Barwick, P. J., Kalouptsidi, M., & Zahur, N. B. (2019). [https://www.nber.org/papers/w26075 China’s Industrial Policy : an Empirical evaluation.] ''National Bureau Of Economic Research''. <nowiki>https://doi.org/10.3386/w26075</nowiki></ref>

A 2025 study challenged that industrial policy under the most favorable circumstances in the textbook cases for industrial policy (sectors with relatively large external economies of scale) had transformative economic effects.<ref name=":2" /> According to the authors, "our estimates imply that even under the optimistic assumption that governments maximize welfare and have full knowledge of the underlying economy, gains from optimal industrial policy are hardly transformative, ranging from an average across countries of 1.08% of GDP in our baseline analysis to 4.06% in the general environment with physical capital and input-output linkages."<ref name=":2" />