Industrial Policy for the 21st Century Lessons from the Past

The urgent need to accelerate on, and make a national success of, the green and digital transition are leading to wide-spread calls for greater government involvement in the economy, including by means of an active industrial policy. After reviewing several case studies, it becomes evident that, against conventional wisdom, nearly all countries have systematically engaged in some form of industrial policy, especially large economies like the USA and China, notwithstanding their very different economic models. The same is true for Europe, both at national level and through EU policies. After analysing these experiences, we draw six key policy lessons to inform future debates on how to shape a successful industrial policy in the years to come, and mitigate its risks, while acting in a context of souring geopolitical tensions. Nonetheless, industrial policy should not undermine the integrity of the Single Market, which has been, and should remain, a central element to ensure Europe’s prosperity going forward.