Dirigisme

Dirigisme refers to an economic policy approach in which the state exercises a strong directive role in directing economic activity rather than leaving decisions to the market. The term, of French origin (from diriger, to direct or guide), is used to describe a spectrum of state-led strategies that aim to coordinate investment, production, and technology through planning, regulation, and selective ownership.

Historically associated with France in the postwar period, dirigisme is not a fixed doctrine but a set of practices. It emerged in the 1930s–40s and became prominent during the mid-to-late 20th century, when governments used planning bodies, sectoral plans, and public investment to guide economic development. The concept has since been applied to other European economies and beyond, to describe policies that combine market mechanisms with strong state guidance rather than pure laissez-faire or full central planning.

Instruments include planning exercises such as five-year or sectoral plans; public investment and subsidies; procurement policies to steer strategic industries; regulation and tariff protections; and the use of state-owned banks and nationalized enterprises to channel credit. The aim is to direct capital toward priority sectors, foster technological upgrading, and stabilize macroeconomic conditions, while often maintaining room for private enterprise.

Critics argue that dirigisme can distort competition, create inefficiencies, and entrench vested interests, while supporters contend that it can mobilize resources for long-term development and industrial modernization. In many countries, dirigisme gradually gave way to liberalization and market reforms from the late 20th century onward, though elements of state-led industrial policy remain in some economies.