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The "Greening" of Industrial Policy, Headwinds and a Possible Symbiosis

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  • Karl Aiginger

    (WIFO)

Abstract

The importance of manufacturing for industrialised countries has been reappraised, specifically in the wake of the financial crisis and of China's rise to world no. 1 in manufacturing. A "new industrial policy" should bolster reindustrialisation, different from the old selective and interventionist one, with proposals by academia, by the European Commission and many national policy makers in the USA, UK and France. It should be pro competitive, in line with societal needs, integrated with innovation and regional policy building on competitive strength and with "sustainability at centre stage". Environmental standards should no longer be considered as an obstacle to competitive manufacturing but could constitute a driver of green growth. Europe sets targets for increasing energy efficiency, increasing shares of renewable energy and cutting emission first for 2020 and then for 2050, demanding the reduction of greenhouse gases by 80 to 90 percent, based on new technologies and prices of carbon dioxide of 250 € per ton. Headwinds to this ambitious path come from low gas prices specifically in the USA, based on a new extraction technology and from the breaking down of the European emission trading. The question now raises whether Europe has to cope with low gas prices as to prevent carbon leakage, or whether Europe can stick to the goals of the envisaged integrated and systemic industrial policy as to raise energy efficiency as well as to reduce carbon emissions by new technologies. A "new industrial policy" would match the US cost advantage in energy by closing the technology deficit, improving skills and going for excellence in energy efficiency and clean technologies.

Suggested Citation

  • Karl Aiginger, 2013. "The "Greening" of Industrial Policy, Headwinds and a Possible Symbiosis," WIFO Working Papers 450, WIFO.
  • Handle: RePEc:wfo:wpaper:y:2013:i:450
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    File URL: http://www.wifo.ac.at/wwa/pubid/46710
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    References listed on IDEAS

    as
    1. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    2. Karl Aiginger & Susanne Sieber, 2006. "The Matrix Approach to Industrial Policy," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(5), pages 573-601.
    3. Karl Aiginger & Olaf Cramme & Stefan Ederer & Roger Liddle & Renaud Thillaye, 2012. "Reconciling the short and the long run: governance reforms to solve the crisis and beyond," WWWforEurope Policy Brief series 1, WWWforEurope.
    4. Karl Aiginger, 2006. "Competitiveness: From a Dangerous Obsession to a Welfare Creating Ability with Positive Externalities," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 161-177, June.
    5. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives," WWWforEurope Working Papers series 44, WWWforEurope.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Karl Aiginger, 2016. "This Can Still Be Europe's Century," WIFO Working Papers 522, WIFO.
    2. Karl Aiginger, 2016. "New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition. Synthesis Report Part I," WWWforEurope Deliverables series 11, WWWforEurope.
    3. repec:wfo:monber:y:2017:i:12 is not listed on IDEAS
    4. repec:wfo:monber:y:2017:i:12:p:947-953 is not listed on IDEAS
    5. Michael Böheim, 2016. "Environmental Policy as a Core Element of Systemic Industrial Policy to Encourage Sustainable Economic Growth," WIFO Monatsberichte (monthly reports), WIFO, vol. 89(1), pages 39-46, January.

    More about this item

    Keywords

    New industrial policy; climate change; carbon leakage;

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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