THE COMPENSATORY IMPACT OF STATE INDUSTRIAL-POLICY - AN EMPIRICAL-ASSESSMENT OF MIDTERM EFFECTS

Objective. Now that some time has elapsed since the adoption of indust rial policies by the American states, the authors reconsider the quest ion of policy impact they began to investigate in an earlier paper (Lo wery and Gray, 1992). Methods. The earlier regression analyses are ext ended from the 1982-86 period to the 1986-89 period using new data on gross state product and a measure of state industrial policy activism. Results. The earlier evidence that industrial policy activism facilit ated economic growth from 1982 to 1986 is not sustained for the 1986 t o 1989 period. Conclusions. The new findings raise serious doubts abou t the long-term efficacy of industrial policy activism in the states.