Reference no: EM133706801

The following questions are based on the commentaries by Edoardo Campanella and Michael Spence available on Courseworks. You may also refer to information available online.

b) What is industrial policy? What objectives does industrial policy pursue beyond the achievement of (Pareto) efficiency? Is industrial policy becoming a widespread phenomenon or does it affect the U.S. only? Explain.

c) Why did COVID and recent geopolitical events make governments and companies aware of the costs of long supply chains?

The CHIPS and Science Act that was enacted in the U.S. in August 2022 consists of two bills: the Endless Frontier Act that incentivizes research and development in the U.S., and the CHIPS for America Act that pursues the return of semiconductor manufacturing in the U.S. or the reallocation of semiconductor manufacturing to the allies of the U.S.

d) Which portion of the CHIPS and Science Act may involve an increase in the relative demand for skill in the U.S? Which portion of the CHIPS and Science Act may involve a reduction in the relative demand for skill in the U.S?

e) Which portion of the CHIPS and Science Act could be seen as a policy pursuing "reshoring"? Which portion of the CHIPS and Science Act could be seen as a policy pursuing "friendshoring"?

f) Suppose that reshoring works. Will the jobs that return to the U.S. plausibly employ the same skill intensity of those that had been lost because of offshoring between the 1990s and the 2010s? Explain.

g) Do you think that the widespread use of industrial policy is i. just the effect of geopolitical tensions, or ii. the cause of further geopolitical fragmentation? There is not a clear answer to this question. Be brief but clarify your reasoning.