New Economic Statecraft: Industrial Policy in an Era of Strategic Competition

Abstract

The 2018 U.S. National Defense Strategy notes that the United States faces ＂an increasingly complex global security environment, characterized by overt challenges to the free and open international order and the re-emergence of long-term, strategic competition between nations.＂ In the ensuing months, much has been made of the security-related aspects of this return to great power competition - including Donald Trump`s role in the decline of the existing arms control architecture, responses to Russia`s annexation of Ukraine, and China`s use of subconventional - or ＂gray zone＂ - military operations in the South China Sea. What this analysis tends to miss, however, are the economic dimensions of strategic competition. To address the question of how insights from international political economy and security studies can be usefully combined to examine strategic competition, we examine how economic statecraft increasingly takes the form of economic policy beyond sanctions regimes. We argue that economic statecraft has become an increasingly central aspect of geostrategic consideration and consider how economic statecraft is being transformed in the current era.