Transnational integration in Europe and the reinvention of industrial policy in Spain

At the turn of the century, writings on globalization were rife with worry that transnational integration will strip states of the ability to direct industrial development. More recent literature suggests that industrial policy is alive and well, if thoroughly reshaped by the changes in the organisation as well as regulation of the economy. This paper contributes to this burgeoning body of research by examining the transformation of industrial policy toward automotive industry in Spain from the start of its integration into the European Economic Community in the 1970s until today. It argues, first, that the claims about globalization restricting the ‘policy space’ of individual states tend to understate the extent to which policy decisions of developing countries had always been restricted by the international environment. Second, it shows how transnational integration not only takes away certain tools but also helps development of others. To make use of them, however, countries have to restructure their systems of industrial governance to make space for a more regionalized, collaborative, and competence-based instead of firm-based policy.