«Green industrial policy Dani Rodrik* Downloaded from at Princeton University on February 5, 2015 Abstract Green ...»
In the second-best setting of green growth, what ultimately matters is whether the global supply of green technologies expands (good) or contracts (bad). From a global standpoint, it would be far better if national competitiveness concerns were to lead to a subsidy war than a tariff war. The former expands the global supply of clean technologies while the latter restricts it. So far, that is largely what we have been getting. But there is no guarantee that we can extrapolate this trend into the future. A pragmatic approach would consist of improving the general practice of industrial policy, along the lines sketched out in the previous section, while gently nudging policy-makers in the direction of greater awareness of how it can be better targeted on purely environmental concerns.
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