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Symposium 2015

Virtual Library File - Industrial Policy and the Energy Union, Institute for Advanced Studies

The Challenge

How to design an industrial policy for Europe, which spurs innovation and enables European industries to lead in the low carbon “space race”? This is a key challenge related to two agendas on wh ...

How to design an industrial policy for Europe, which spurs innovation and enables European industries to lead in the low carbon “space race”? This is a key challenge related to two agendas on which international attention is currently focused: the COP21 of the United Nations Framework Convention on Climate Change in Paris, and Europe's recent agenda for growth, jobs, and competitiveness. Much like climate policy, the need for a new industrial policy is widely acknowledged among politicians, businesses, and the wider society. However, there is little confidence that an innovative and effective industrial policy can be designed to fit all sectors, regions, and stakeholders alike. Yet, with a low carbon market estimated at more than 4.5 trillion euros, progress in this area is vital. One promising approach is to develop a modern understanding of the role of public policy and free markets. With this in mind, the idea of "co-opetition" seeks to stimulate industrial innovation through a combination of both cooperation and competition among countries and enterprises.

This presentation highlights that Europe's industry has many advantages in the global competitiveness race and that the de-industrialisation trend is not limited to the EU. It argues that Europe needs a broader understanding of manufacturing and of the goals of industrial policy, which should target innovation in advanced manufacturing. Industrial policy should be seen as an institutional process based on the principles of embeddedness, discipline and accountability. Rodrik argues that it is important not to exaggerate what industrial policy can accomplish (e.g., it cannot reverse inevitable de-industrialisation). Industrial policy is in fact a process and a frame of mind - it is not a set of policy tools and sectoral priorities. Finally, to achieve a strong industrial policy, the quality of government-business dialog is critical.