The turn against globalizing processes has encompassed emerging trade wars and the efforts, in the wake of successive crises, of “de-risking” through the diversification of supply chains or their reshoring. Populism and nationalism have also become an increasingly salient feature of politics and the ideas around which they coalesce have increasingly been mainstreamed as both centre-right and centre-left parties have sought to recapture the votes that they have lost to these new forces.

This chapter considers the growing use of “industrial policy”, particularly within the Western countries that had formerly proclaimed their allegiance to the efficacy of free market economics. Industrial policy refers to the proactive use of state resources and powers to promote economic development in chosen sectors or the expansion of chosen firms that are selected as “national champions”. The turn to industrial policy has been accompanied by a revived faith in government economic interventionism more broadly and an increasing scepticism, or at least caution, towards markets and market-based outcomes.

This chapter argues that the increasingly large-scale use of industrial policy, which has been endorsed and supported, albeit in different ways, by governments on both the left and much of the right, is coming to play a pivotal role in fuelling deglobalizing processes. Indeed, even though the East Asian countries used industrial policy and “developmentalism” to secure their place in the world economy, it may well become an important “driver” of deglobalization. By its very character, industrial policy inevitably gives credence to zero-sum forms of economic thought whereby countries can only secure gains by winning advantage over others. It contains an inherent nationalist edge.

The “new Washington Consensus”

Edward Luce of the Financial Times has argued that there is an emerging paradigm that is broadly shared across North America and Europe and is largely bipartisan in character. He develops this description by invoking the concept of a “New Washington Consensus” (Luce 2023). From this perspective, and while it may seem eccentric or perverse amid the bitter partisan divisions in Washington, DC, both Republicans and Democrats offer more or less the same message based on visions of American decline and the rise of China as a threat and a competitor.