This is an interesting idea, though somewhat utopian…
the analysis of industrial policy needs to focus less on the policy outcomes — which Rodrik argues are inherently unknowable ex ante — and more on getting the policy process right. In Rodrik’s words:
We need to worry about how we design a setting in which private and public actors come together to solve problems in the productive sphere, each side learning about the opportunities and constraints faced by the other, and not about whether the right tool for industrial policy is, say, directed credit or R&D subsidies or whether it is the steel industry that ought to be promoted or the software industry.
Rodrik’s central thesis is that industrial policy is a discovery process—one where firms and the government learn about underlying costs and opportunities and engage in strategic coordination. He is not ignorant of the risks of industry capture. On the contrary, he acknowledges that industrial policy is open to corruption and rent-seeking. The natural response of (non-corrupt) bureaucrats is to insulate policymaking and implementation from private interests and to shield public officials from close interaction with business people. Rodrik’s argument is that this instinct to keep the private sector at arms-length is diametrically opposed to the need for bureaucrats to engage with business people in order to properly understand impediments to growth.
[From an MED paper released this week as part of the work of the financial markets taskforce. The Rodrik paper is supposed to be here (but it didn't work for me).]
I have long subscribed to the view that a solid grounding in the structure/practices/costs etc of an industry is essential for good policy decisions, so this rings very true. The difficult is that industry policy (whether inter- or intra-) generally has winners and losers. So the “come together” prescription is actually an invitation to a debate between opposing interests.
If policy makers could chair those debates effectively, which would include a clear separation between fact-finding and analysis, this could work very well. Thats a big if. But its worth a shot. And if you are an public official with the requisite bravery, I’d be happy to help.