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EU industrial policy between crises and the twin transition

Author

Listed:
  • Claire Giordano

    (Bank of Italy)

  • Giacomo Roma

    (Bank of Italy)

  • Alessandro Schiavone

    (Bank of Italy)

  • Filippo Vergara Caffarelli

    (Bank of Italy)

  • Stefania Villa

    (Bank of Italy)

Abstract

In the context of the twin (digital and green) transition, this paper first describes the impact of the exceptional shocks on growth and external competitiveness of the EU industrial sector since 2020. It then takes stock of the industrial policy instruments and initiatives undertaken by the EU in order to counteract these crises and to rise up to the ongoing structural transformation. Being a supporting competence of the EU, industrial policy consists both of national and EU measures. We document how industrial policy-related State Aid, based on national resources and objectives, is the largest instrument by funding, while the amount of resources assigned to EU-level instruments (including Horizon Europe, the Important Projects of Common European Interest and InvestEU) is far more limited. The paper also underscores the greater emphasis in the recent approach of EU industrial policy on 'vertical' measures, by analysing four sectoral initiatives on critical raw materials, clean technologies, chips and defence. Overall, an effective EU industrial policy requires a collaborative approach, coordinated strategies and adequate, targeted and conditional funding, to boost competitiveness and mitigate the risk of widening divergence across Member States.

Suggested Citation

  • Claire Giordano & Giacomo Roma & Alessandro Schiavone & Filippo Vergara Caffarelli & Stefania Villa, 2025. "EU industrial policy between crises and the twin transition," Questioni di Economia e Finanza (Occasional Papers) 931, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_931_25
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F10 - International Economics - - Trade - - - General
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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