For market purists, any mention of the term industrial policy used to evoke visions of heavy-handed Soviet-style central planning, or the stifling state-centric protectionism employed by Latin American countries in the late 20th century. But that conversation turned dramatically over the last several years, as President Joe Biden’s signature legislative achievements like the CHIPS and Science Act and the Inflation Reduction Act showcased policies designed to influence and shape industries ranging from tech to pharma to green energy. My guest today, Harvard Kennedy School Professor Ricardo Hausmann, is the founder and director of the Growth Lab, which studies ways to unlock economic growth and collaborates with policymakers to promote inclusive prosperity around the world. Hausmann says he believes markets are useful, but have shown themselves inadequate to create public benefits at a time when public objectives like the clean energy transition and shared prosperity have become increasingly essential to human society. In a wide-ranging conversation, we’ll discuss why industrial policy is making a comeback, tools that the Growth Lab has developed to help poorer countries and regions develop and prosper, and the uncertainty being caused by President Trump’s pledge to raise tariffs and protectionist barriers. Policy Recommendations: * Encourage governments to track industries that are not yet developed but have the potential for growth and monitor technological advancements to identify how new technologies can impact existing industries or create new opportunities. * Develop state organizations that are deeply embedded in understanding societal trends and industrial potential, similar to Israel’s office of the Chief Scientist or the U.S. Presidential Commission on Science and Technology. * Encourage governments to develop a pre-approved set of tools—including training, educational programs, research programs, and infrastructure—that can be quickly mobilized for specific economic opportunities. * Teach policy design in a way that mirrors medical education (e.g., learning by doing as in a teaching hospital), because successful policy design requires real-world experience, not just theoretical knowledge.