AI Reveals the Truth About 50 Years of U.S. Industrial Policy

Why has AI and national security become the core driving force behind U.S. industrial policy?

In their latest research, Wei Shangjin and collaborators Ju Jiandong and Li Yuanjun use large language models to precisely analyze over 18,000 bills and executive orders from 1973 to 2022. They find that the United States is not the laissez-faire economy commonly believed, but rather an active industrial policy maker over the past half-century. On average, more than nine new intervention measures are introduced each year, with policy frequency remaining stable across both parties in power.

Contrary to economic theories emphasizing competitiveness, in reality, more than half of U.S. industrial policies prioritize national security and supply chain resilience.

To prevent efficiency losses from administrative intervention, these policies generally include clear expiration dates, pilot programs, or trigger mechanisms for withdrawal.

Market testing demonstrates that these policies significantly alter resource allocation, with supported companies’ stock prices and revenues increasing substantially after policy implementation.

Over the past 50 years, the U.S. government has continuously and profoundly reshaped its economic landscape through visible tools 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.