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Rational industrial policy requires detailed mapping of supply chains to identify critical upstream suppliers.
  • By analyzing tax returns, customs data, and supplier relationships, a government can pinpoint which foreign components are essential.
  • Once identified, the state can incentivize domestic production of those critical parts, reducing dependence on hostile suppliers.
  • This approach is far more precise than blanket tariffs, targeting the true bottlenecks in the supply chain.
  • It also enables coordinated investment, workforce training, and technology transfer for the identified sectors.
  • Balaji cites examples where such mapping could have prevented supply‑chain shocks during the pandemic.
Balaji SrinivasanThe Peter McCormack Show00:24:24

Supporting quotes

Rational industrial policy would map supply chain, identify critical suppliers. Balaji Srinivasan
Crowdfunding domestic vendors among foreign customers. Balaji Srinivasan

From this concept

Tariffs and Industrial Policy Are Ineffective Without Supply-Chain Insight

Balaji critiques tariffs as blunt, instant taxes that destroy margins, and proposes data-driven industrial policy that maps supply chains to build domestic capacity.

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