‘If it ain’t broke, don’t fix it’: a critical realist approach to industrial policy

The resurgence of interest in the topic of industrial policy has been accompanied by an attempt to study it through novel methods of mainstream Economics, within what has been termed the ‘new empirics’ of industrial policy. Such an attempt stands in contrast to the more usual methodology adopted in what we call here the Industrial Policy/Developmental State (IPDS) paradigm. Drawing on the Critical Realist approach to Economics, we show why the methodology adopted in the IPDS paradigm is more adequate for the study of industrial policy than the methodology adopted within the ‘new empirics’ of industrial policy. We also argue that the methodology employed in the IPDS paradigm is quite compatible with Critical Realism, and would benefit from a more explicit engagement with the latter when systematizing its key methodological tenets.