Economic Crisis and Industrial Policy in the Union: The Need for a Long-term Vision of Industrial Development

In this short chapter, we discuss the need for industrial policy in the Union beyond the crisis. We define industrial policy in a wide sense. The term is often taken in a restrictive sense, as selective intervention to support specific firms or specific industries. This selective intervention was the so-called ‘constructivist’ approach prevailing in the EU (EEC at the time) up to the mid-1980s. The approach to industrial policy changed thereafter, focusing on providing the conditions for business to develop rather than directly intervening in markets. In the EU, this is the approach defined by Martin Bangemann in his famous 1990 report, which constituted the basis for the industrial policy adopted in the EU in the 1990s and enshrined in the Maastricht Treaty. This approach is horizontal, in that measures apply to all firms and industries without discriminating or favouring specific ‘champions’. In the 1990s, the very term ‘industrial policy’ was abandoned because taken to mean the old approach of the past that was not pro-competitive. Rather, other terms were used such as ‘competitiveness policy’. The broad objective of industrial policy is then to favour the competitiveness of firms, by ensuring appropriate conditions (macroeconomic stability, respect of competition rules, efficient regulation, R&D programmes and so on).