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Industrial policy: a tale of innovators, champions, and B52s

Author

Listed:
  • RIESS, Armin

    (European Investment Bank, Economic and Financial Studies)

  • Valila, Timo

    (European Investment Bank, Economic and Financial Studies)

Abstract

Recognising and discussing the elusiveness of industrial policy as a distinct policy concept, this paper argues against what probably is the most extreme type of so-called "vertical" industrial policy, that is, support for national or European champions. It also critically reviews the rationale for one of the economically most appealing so-called "horizontal" industrial policies, that is, support for research and development. Although not disputing that there is a rationale for such support, we reason that it is not as strong as commonly assumed. In this context, we find that while competition is key for spurring innovation and growth, there is room for industrial policy - interestingly enough, not so much to encourage firms to extend the technological frontier, but to catch up with it. The paper also previews the other contributions to this volume of the EIB Papers.

Suggested Citation

  • RIESS, Armin & Valila, Timo, 2006. "Industrial policy: a tale of innovators, champions, and B52s," EIB Papers 1/2006, European Investment Bank, Economics Department.
    • Handle: RePEc:ris:eibpap:2006_001
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    Citations

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    Cited by:

    1. Tokmakova Elena, 2017. "Industrial Policy: Tools And Indicators," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 1, February.
    2. Cameli, Simone Amato, 2023. "A complexity economics framework for 21st-century industrial policy," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 168-178.
    3. Bagheri Moghaddam, Nasser & Mousavi, Sayyed Moslem & Moallemi, Enayat A. & Nasiri, Masoud, 2012. "Formulating directional industry strategies for renewable energies in developing countries: The case study of Iran’s wind turbine industry," Renewable Energy, Elsevier, vol. 39(1), pages 299-306.
    4. Feld, Lars P. & Schmidt, Christoph M. & Schnabel, Isabel & Truger, Achim & Wieland, Volker, 2019. "Den Strukturwandel meistern. Jahresgutachten 2019/20 [Dealing with Structural Change. Annual Report 2019/20]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201920.

    More about this item

    Keywords

    industrial policy; innovation; competition;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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