The long-term effects of industrial policy

• 成果类型: Article
• 署名作者: Choi, Jaedo; Levchenko, Andrei A.
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors; University of Michigan System; University of Michigan; National Bureau of Economic Research; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2025.103779
• 发表日期: 2025
• 关键词: industrial policy; South Korea; HCI drive; learning-by-doing; financial frictions; welfare

摘要

This paper provides causal evidence on the impact of a large-scale industrial policy-South Korea's Heavy and Chemical Industry (HCI) Drive-on firms' long-term performance and quantifies its long-term welfare effects. Using unique historical data on the universe of firm-level subsidies and a natural experiment, we find large and persistent effects of this industrial policy. Subsidized firms grew faster than those never subsidized for 30 years after subsidies ended. We build a quantitative heterogeneous firm model that rationalizes these effects through a combination of learning-by-doing and financial frictions. The model is calibrated to firm-level data, and its key parameters are disciplined with the econometric estimates. The HCI Drive generated larger benefits than costs. If it had not been implemented, South Korea's welfare would have been 3%-4% lower. The majority of the total welfare impact comes from the long-term productivity benefits of learning-by-doing.