AI reveals the truth about 50 years of U.S. industrial policy

Why has national security become the core driving force of U.S. industrial policy?

Wei Shangjin and his collaborators Ju Jiandong and Li Yuankun’s latest research utilizes large language models to analyze over 18,000 bills and presidential orders in the U.S. from 1973 to 2022, revealing that the U.S. is not the laissez-faire economy that people often believe, but rather an active industrial policy maker for the past half century. On average, more than nine new intervention measures are introduced each year, with policy frequency remaining stable during both parties’ administrations.

Unlike the competitive logic emphasized by economic theory, more than half of U.S. industrial policies prioritize national security and supply chain resilience as primary considerations.

To prevent efficiency losses that might arise from administrative intervention, these policies generally include clear validity periods, pilot projects, or exit mechanisms triggered by specific conditions.

Research through market testing has proven that these policies significantly altered the direction of resource allocation, with the stock prices and revenues of supported companies seeing substantial increases after the policies were implemented.

For the past 50 years, the U.S. government has been continuously and profoundly reshaping the domestic economic landscape through “visible hands” such as public procurement, subsidies, and trade restrictions.

Paper: Ju J D, Li Y K, Wei S J. The United States as an Active Industrial Policy Nation [R]. NBER, 2026.