Industrial policy for a Europeanindustrial renaissance. A few reflections

This paper raises and attempts to address three questions that add to the recent debate on industrial policies to promote a European “industrial renaissance”. We ask (i) What type of de-industrialisation represents a threat for Europe? (ii) What type of structural change can industrial policy steer in a context of increasing international fragmentation of production, both across European countries and worldwide? (iii) What type of industrial policy shall we advocate, that goes beyond the manufacturing sectors? With no pretence to provide all the answers or yet another wish list of policy tools, we argue that we are “doomed to choose” (Hausmann and Rodrik, 2006) what type of structural transformation is Europe in need of, in a context of harsher global competition from the emerging countries; of staggering income polarisation within Europe itself; of relentless international fragmentation of production processes. First, we claim that industrial policy should target sectors and segments of value chains that support the manufacturing sector and not necessarily represent a hollowing out of the industrial base. Second, industrial policy should target structural transformation alongside large “missions” and learn from classical debates on industrialisationled development. Interventions should therefore go beyond the traditional vertical versus horizontal tools distinction and complement a “mission oriented” plea with other tools, to avoid yet another “one size fits all” approach.