What is to be produced? The making of a new industrial policy in Europe

The goals of developing high-knowledge economic activities, expanding industry, reaching environmental sustainability and achieving greater convergence are clearly stated in the Europe 2020 strategy and in the major policy documents of the European Union. What is the policy space for industrial policy in Europe? The current institutional setting of the EU is hardly adequate to address such challenges and to accommodate such policy tools. Building on this analysis, chapter 4 of the report introduces a proposal for a European industrial policy that goes well beyond traditional approaches. It calls for a Europe-wide industrial policy, moving beyond traditional national actions. A policy mobilising 2% of Europe’s GDP (about EUR 260 billion) per decade is proposed, offering at the same time greater national policy space with a ‘golden rule’ for public investment. A crucial goal of this policy is to reduce the divergence between Europe’s centre and periphery, and therefore the resources of industrial policy should be concentrated in weaker regions and weaker countries.