industrial policy

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Official policies concerning the direction of economic activity to particular parts of the economy. For many years governments were concerned with the division of economies between industry and primary production; the less industrialized countries tried to encourage the growth of local industry, while the more industrial countries protected their native agriculture and mines. In more recent years attention has centred on trying to encourage the rise of high-tech sectors using advanced technology. Policies have included using tax rules and government money to encourage research and development, intervention in financial markets to direct investment funds into favoured sectors, and intervention in the mergers market to try to obtain firms large enough to gain economies of scale.

Subjects: Economics.

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