Industrial Policy After the Geopolitical Turning Point

Recent Article by Gabriel Felbermayr in WIFO-Monatsberichte (monthly reports)
Multiple and simultaneous challenges such as the COVID-19 pandemic, which has still not been fully addressed, dislocations in global supply chains, the energy crisis exacerbated by the Ukraine war, the green transformation and, above all, geopolitical rivalries are causing a rediscovery of industrial policy.

Many countries are relying on subsidies, restrictions on foreign trade and direct investment, and exemptions in competition law to promote domestic industry. In Europe, too, the question is how to deal with these new conditions. Instead of expanding industry-specific subsidies or exceptions in competition law, a comprehensive location policy should be pursued. Government funds should be concentrated on the expansion of renewable energy, infrastructure, and a training offensive. At the EU-level, the best industrial policy is to further deepen and dynamise the internal market.

Finalization: January 2023
Specialist publication: WIFO-Monatsberichte