Constructing a Tool for Industrial Policy Analysis

This paper focuses on firm-level industrial policies, and aims to contribute to the accumulation of analyses that are useful for industrial policy practice in Japan by providing a tool that exploratorily analyzes policy impacts using the difference-in-differences (DiD) method, thereby reducing the workload associated with the empirical analysis of policies. I develop an industrial policy analysis tool (in R scripts) that estimates the effects of policies implemented on a large number of firms on outcome variables presumed to be associated with the performance of the treated firms. When the tool is applied to an actual industrial policy, policy effects on the treated firms were observed for several outcome variables, demonstrating that it can be employed to estimate the effects of individual industrial policies. The use of the analysis tool is expected to lower barriers to policy analysis, and facilitate the accumulation of high-quality evidence, thereby promoting evidence-based policymaking (EBPM).