Since the financial economic crises of the early 1970s the debate about economic and industrial affairs has intensified everywhere with, in many countries,the focus of economic policy shifting from demand to supply side remedies. What is striking about the post-1974 pattern is the extent to which countries have diverged in economic performance. The results of attempts to explain these differences are contradictory both between and within academic disciplines, though there is general agreement that the microeconomic policies of government can, and in most cases have, affected economic performance. The objectives of the papers in this special issue are (1)to describe the nature of the industrial policy agenda in each country; (2) to describe the instruments available and the scale of assistance provided to industry directly or indirectly; (3) to provide an outline of the institutional and political context in which policy is formulated in each country. Three broad comparative conclusions can be drawn: (1) we should not be too dogmatic about inferring the preconditions (e.g. type of party competition or bureaucratic structure) for apparently ‘successful’ policies; (2) the pursuit of a coherent industrial strategy appears to depend on socio/political condition which have been present in some countries but absent in others, such as a broad acceptance among political elites on the need to play an active part in helping industry to adapt to change and the existence of good communications between political/bureaucratic and economic actors, including a broad acceptance by private investors of the need for government intervention ; (3) even in countries which meet these conditions, particular industrial strategies change over time, sometimes dramatically, though this suggests that these countries have a greater capacity to adapt to change, particularly in response to external events, than countries characterised by policy inertia or policy confusion.

The structural weaknesses of the UK industrial economy are discussed and it is argued that the policy response does not match the scale of the crisis. Whether there should be an industrial policy is politically contentious. Aid has been directed towards the declining sections of manufacturing industry. Policy adaptation has been ad hoc and decision-making on industrial policy and programme administration is fragmented. Reform is difficult because of genuine policy disagreements between the main political parties, the inherent tendency to return to cautious middle-ground policies defined by the bureaucracy and the persistence of a laissez-faire tradition that leads to an institutional isolation of business and government. The unsatisfactory nature of British industrial policy is related to factors deeply embedded in the political system and a pessimistic view is taken of the possibility of profound change.

In the context of declining relative output and productivity there have been increasing calls for the American government to play a greater role in industrial policy in recent years. Traditionally, however, US government intervention has been ad hoc and reactive rather than planned and strategic. Regulation policy has rarely been linked to economic growth, and most recently has evolved in a policy context separate from and largely antagonistic to business. Direct and indirect government aid is largely a result of the lobbying activities of diverse economic interests operating in an open but fragmented policy system. Of the various industrial policy options open to federal governments only one, facilitative or positive adjustment policy, is politically and ideologically possible. Even this, however, will be difficult to implement in a pluralistic and fragmented political system.

Danish industrial policy reflects a ‘liberalistic’ paradigm, with industrial subsidies being general rather than selective, and based on profitability. There was an increase in the number of industrial policy instruments introduced in the second half of the 1970s, and in particular there seems to have been an increase in subsidies for technological innovation. The amount of money allocated for industrial subsidies has increased, especially during the economic recession. However, Danish industrial policy can only be conceived of as a crisis response policy in a relatively diffuse way, with only a few arrangements directly targetted at firms in difficulties, whereas most aim at making the surviving firms expand, innovate and increase their exports. Similarly, with few exceptions Danish industrial policy can be seen as anticipatory only in a very general way. The administration of industrial policy is characterised by close cooperation between state, industry and labour in tripartite boards and committees that take decisions about the administration of industrial policy or advise the government. The widespread use of such tripartite bodies hampers changes in industrial policy because all partners have to acquiesce in the changes. Innovation in Danish industrial policy is likely to be a gradual process, with most existing arrangements surviving, and a desultory increase in the use of more selective measures.

Japan has been characterised as the most successful industrialised country in its ability to attain growth in GNP, even during a world recession. This article explores the background to the Japanese economic success of postwar years. It emphasises in particular the part played in that success by the Japanese banking sector and cheap credit extended to expanding industries. The article discusses the respective roles of the Ministry of Trade and Industry and the Ministry of Finance. It concludes that both domestic and international pressures are producing changes within the Japanese economy which are reflected in alterations in the tasks and influence of these institutions.

Irish industrial policy is of recent origin. Free trade has replaced an earlier reliance on protection to generate industrial growth. For the past 25 years Irish industrial policy has been characterised by the attraction of foreign capital, export-led industrialisation, and state intervention. The Industrial Development Authority has been the major agency in orchestrating this policy of development. Multinational corporations have made a significant contribution to this process. The current recession has led to a deeper involvement by the state in industrial policy. Corporatist instruments have been devised which retain considerable influence. Industrial policy is experiencing further change. There is a new emphasis on the generation of an independent Irish industrial sector, while monetary constraints are imposing restrictions on the range of policy options open to the state.

Prior to 1974/5 the industrial problem of Italy was clearly seen as that of trying to industrialise the South. However, the end of cheap labour and cheap energy meant that Mezzogiomo industrialisation could no longer be seen in isolation from the rest of the country. Underpinning the new policy was the compromise set of measures approved at the end of 1977 to deal with the problem of ‘industrial reconversion and restructuring’. It is not clear that the more general approach now in effect adds up to a coherent industrial strategy. However, a quantitative evaluation of past investment policies reveals a considerable flexibility in the policy response to the new economic conditions.

Starting from the relative success of the Austrian economy in the 1970s the problems of industrial policy and the position of industrial policy in the context of economic policy are examined. Policies directed towards improving the industrial structure have had a lower priority than policies aimed at producing sufficient total economic growth to avoid unemployment and disputes over the distribution of the GNP. The structure of Austria's foreign trade shows that Austria still has not achieved the industrial structure appropriate for a small industrial country in an exposed geographical position. In Austria the problems of industry are regarded as legitimate affairs of government and, although there is criticism of the details of government intervention, the economic responsibility which is conferred on the government is an extensive one. Austria's political culture exhibits both consociationalist traits, with most laws being passed with the support of the two big parties,, and ‘social partnership’ in the form of voluntary co-operation between the unions and employers' associations. The political consensus means that discussion tends to revolve round technical rather than fundamental issues of industrial policy. Since the early 1970s the preservation of full employment has become the dominating industrial policy goal of the Austrian government; as a result, policy is mainly reactive rather than proactive. Fiscal investment aids are by far the most important industrial policy instrument, though their use has been criticised. There are also direct expenditure schemes, aimed at particular sectors as well as the general stimulation of investment; these aids have also been criticised. The prospects for the introduction of industrial policies more focussed on qualitative changes in industrial structure are not considered good, but political stability seems assured.

This paper deals with the contribution of economic planning to French industrial policy and performance. This was highly significant until the mid 1960s but declined thereafter due to a combination of economic and political factors. The inherent problems of across-the-board regulation in a complex industrial economy reinforced the displacement of the planners from the traditional French elite. In the late 1970s, planning had begun again to provide an informational support to other policies for restructuring industry in the face of the world market. The paper ends with an evaluation of the Mitterrand government's aspirations for more dirigiste industrial planning.