Book

Sparking Europe’s new industrial revolution: A policy for net zero, growth and resilience

This book assesses what must be done to implement industrial policy in a way that will achieve overarching goals while minimising distortions.

Publishing date
03 July 2023
Eolic turbines

Summary

Industrial policy has for a long time raised difficult questions for policymakers to unpick. What justifications are there for government intervention in market mechanisms, and how and to what extent should governments intervene? What are the pros and cons of picking ‘winners’ for support? These questions have made a powerful return in the wake of the COVID-19 pandemic and geopolitical uncertainty, and because of the pressing need to move to net-zero emission economies. In addition, the European Union is reviving its industrial policy in the context of support given to companies in the United States under the US Inflation Reduction Act. This volume, produced with financial support from the European Climate Foundation, assesses what must be done to implement industrial policy in a way that will achieve overarching goals while minimising distortions.

To download the full e-book, please use the download button in the top-left of the page. To download specific chapters separately, click the links in the table of contents below. 

Table of contents

  1. Industrial policy in Europe: past and future | Simone Tagliapietra and Reinhilde Veugelers
  2. An innovation-driven industrial policy for Europe | Philippe Aghion
  3. Productivism and new industrial policies: learning from the past, preparing for the future | Dani Rodrik
  4. Industrial policy and technological sovereignty | Uwe Cantner
  5. Cooperation or conflict? A transatlantic look at whether industrial policy will produce solutions or generate unmanageable conflicts | Laura Tyson and John Zysman
  6. Green industrial policy: the necessary evil to avoid a climate catastrophe | Alessio Terzi
  7. Industrial strategies for Europe’s green transition | Chiara Criscuolo, Antoine Dechezlepretre and Guy Lalanne
  8. A more globally-minded European green industrial policy | Ricardo Hausmann and Ketan Ahuja
  9. Europe’s green industrial policy | Simone Tagliapietra, Cecilia Trasi and Reinhilde Veugelers
  10. Smart green industrial policy | Ben McWilliams and Georg Zachmann
  11. Industrial policy for electric vehicle supply chains and the US-EU fight over the Inflation Reduction Act | Chad Bown
  12. A new pharma industrial policy for Europe? Lessons from COVID-19 | Mathias Dewatripont

About the authors

  • Philippe Aghion

    Philippe Aghion, a Non-resident Senior Fellow since September 2006 to 2016, was coordinating Bruegel's research project on higher education.

    He is the Robert C. Waggoner Professor of Economics at Harvard University, where he started teaching Economics in 2000. Previously, he held positions at the European Bank for Reconstruction and Development (EBRD) and taught at the Massachusetts Institute of Technology (MIT), Nuffield College (Oxford), and University College London.

    Philippe's research spans a broad array of fields including corporate finance, industrial organisation, political economy and macroeconomics. He is managing editor of the journal The Economics of Transition, which he launched in 1992.

  • Ketan Ahuja

    Ketan Ahuja leads a research programme on green growth at Harvard’s Growth Lab and is a DPhil student in law at the University of Oxford. His research focuses on how to regulate market competition in ways that reduce inequality, share power more broadly and support innovation and economic growth.

  • Chad P. Bown

    Chad P. Bown is Reginald Jones Senior Fellow at the Peterson Institute for International Economics. His research examines international trade laws and institutions, trade negotiations and trade disputes. He was previously a senior economist for international trade and investment in the White House on the Council of Economic Advisers, and most recently was a lead economist at the World Bank. Previously, he was a tenured professor of economics at Brandeis University.

  • Uwe Cantner

    Uwe Cantner is Professor of Economics at Friedrich Schiller University Jena, where is also is Vice President for Young Researchers and Diversity Management. He is Professor of Economics at the University of Southern Denmark/Odense and Chairman of the Federal German Government Commission of Experts for Research and Innovation. 

  • Chiara Criscuolo

    Chiara Criscuolo joined the Organisation for Economic Co-Operation and Development (OECD) in 2009. She heads the Productivity and Business Dynamics Division in the Directorate for Science, Technology and Innovation (STI) at the OECD.

    Chiara’s work spans the fields of entrepreneurship, enterprise dynamics, productivity and policy evaluation and has played a leading role in advancing the use of firm level data and of microdata projects within the OECD. She has designed and coordinated large cross-country microdata projects on employment dynamics, productivity, as well as research and development (R&D). She co-manages the Global Forum on Productivity and has contributed to key horizontal and high level projects and publications. These include the OECD volumes “Future of Productivity”, “New sources of growth: Knowledge Based capital”, and the “OECD Innovation Strategy”.

    Since 2017 she is one of eleven economists appointed to the newly set French National productivity Board.

    Her research on innovation, business dynamics, productivity, policy evaluation and international trade has been extensively published in leading academic journals including The American Economic Review, The Review of Economics and Statistics and the Journal of International Economics. She acts as reviewer for top ranked academic journals. Her work has further featured in the Economist, Financial Time and VoxEU, among others.

    Chiara is currently a research associate at the Centre for Economic Performance at the London School of Economics, where she was a research fellow before joining the OECD.

    She holds a doctoral degree in Economics from University College London and held academic appointments at the University of Siena, City University and the University of Cambridge, in addition to the LSE, ahead of joining the OECD.

  • Antoine Dechezleprêtre

    Antoine Dechezleprêtre is a Senior Economist at the OECD where he heads the joint Green Growth work stream of the Economics Department and the Environment Directorate. He is currently on leave from the London School of Economics, where he is an Associate Professorial Research Fellow at the Grantham Research Institute on Climate Change and the Environment. His work deals principally with the impact of environmental policies on businesses, in particular on the development and adoption of cleaner technologies. His research has been published in international scientific journals in the field of applied microeconomics, environmental economics and energy economics. He holds a PhD in economics from Ecole des Mines de Paris (France).

    For more information about the author, click here.

  • Mathias Dewatripont

    He holds a BA (1981) and MA (1982) in economics from ULB and a PhD in Economics from Harvard University (1986). His general research area is the theory of incentives and organizations. Since 1990, he has been Professor of Economics at ULB (part-time between 2011 and 2017). Between 1998 and 2011, he was part-time (7 weeks a year) Visiting Professor at MIT and Research Director of CEPR. Fellow of the Econometric Society, laureate of the 1998 Francqui Prize and of the 2003 Yrjo Jahnsson Prize for Economics, he was President of the EEA in 2005. He was member of the Scientific Council of the European Research Council between 2005 and 2012. He was Managing Editor of the Review of Economic Studies (1990-94) and one of the three Programme co-chairs of the 2000 World Congress of the Econometric Society. He is member of the Académie Royale De Belgique and Foreign Honorary Member of the American Academy of Arts and Science. He was co-Director of ECARES (1991-2002) and, upon the creation of the Solvay Brussels School of Economics and Management, he was its Vice-President (2008-2009), President (2009-2010) and then Dean (2010-2011). He was outside Director of CGER-Bank (1992-99), and he was Executive Director of the National Bank of Belgium between May 2011 and May 2017 (and its Vice-Governor between June 2014 and March 2015), being its representative on the Basel Committee on Banking Supervision (2011-2017) and on the Supervisory Board of the European Central Bank (2014-2017).

     

  • Ricardo Hausmann

    Ricardo Hausmann is the founder and Director of Harvard’s Growth Lab and the Rafik Hariri Professor of the Practice of International Political Economy at Harvard Kennedy School. Under his leadership, the Growth Lab has grown into one of the most well regarded and influential hubs for research on international development.

    His scholarly contributions have had a significant impact on the study and practice of development. These include the development of the Growth Diagnostics and Economic Complexity methodologies, as well as several widely used economic concepts, such as Dark Matter, Original Sin, and Self-discovery. His work has been published in some of the top journals in the world, including ScienceJournal of Development EconomicsJournal of International EconomicsProceedings of the National Academy of SciencesJournal of International Money and FinanceEconomic Policy and the Journal of Economic Growth, among many others. These publications have been cited more than 42,000 times, and their main findings have been highlighted in mass media outlets such as The New York TimesThe Financial TimesThe EconomistThe Wall Street Journal, and The Washington Post.

    Since launching the Growth Lab in 2006, Hausmann has served as principal investigator for more than 50 research initiatives in nearly 30 countries, informing development policy, growth strategies and diversification agendas at the national and sub-national levels.

    Before joining Harvard University, he served as the first Chief Economist of the Inter-American Development Bank (1994-2000), where he created the Research Department. He has served as Minister of Planning of Venezuela (1992-1993) and as a member of the Board of the Central Bank of Venezuela. He also served as Chair of the IMF-World Bank Development Committee. He was Professor of Economics at the Instituto de Estudios Superiores de Administracion (IESA) (1985-1991) in Caracas, where he founded the Center for Public Policy. He holds a Ph.D. in economics from Cornell University.

  • Guy Lalanne

    Guy Lalanne is a Senior Economist at the Directorate for Science, Technology and Innovation Directorate of the Organisation for Economic Co-operation and Development. Previously, he held several positions in the French Treasury, notably as Secretary General of the macroprudential authority and Head of the Industrial Policy, R&D and Innovation Division, and in the French National Statistical Institute. 

     

  • Ben McWilliams

    Ben is working for Bruegel as an Affiliate fellow in the field of Energy and Climate Policy. His work involves data-driven analysis to critique and inform European public policy, specifically in the area of the energy sector and its decarbonisation. Recent work has focussed on the implications of the ongoing energy crisis and policy options for responding. Other topics of interest include tools for stimulating industrial decarbonisation and the implications for new economic geography from the advent of new energy systems, particularly from hydrogen. 

    He studied his MSc in Economic Policy at Utrecht University, completing a thesis investigating the economic effects of carbon taxation in British Colombia. Previously, he studied his BSc Economics at the University of Warwick, with one year spent studying at the University of Monash, Melbourne.

    Ben is a dual British and Dutch citizen.

  • Dani Rodrik

    Dani Rodrik is Ford Foundation Professor of International Political Economy at the Harvard Kennedy School. He has published widely in the areas of economic development, international economics, and political economy. His current research focuses on employment and economic growth, in both developing and advanced economies. He is the recipient of numerous awards, including most recently the Princess of Asturias Award for Social Sciences. Professor Rodrik is currently President-Elect of the International Economic Association and co-director of the Economics for Inclusive Prosperity network. His newest book is Straight Talk on Trade: Ideas for a Sane World Economy (2017). He is also the author of Economics Rules: The Rights and Wrongs of the Dismal Science (2015), The Globalization Paradox: Democracy and the Future of the World Economy (2011) and One Economics, Many Recipes: Globalization, Institutions, and Economic Growth (2007).

  • Simone Tagliapietra

    Simone Tagliapietra is a Senior fellow at Bruegel. He is also a Professor of EU Energy and Climate Policy at The Johns Hopkins University - School of Advanced International Studies (SAIS) Europe.

    His research focuses on the EU climate and energy policy and on the political economy of global decarbonisation. With a record of numerous policy and scientific publications, also in leading journals such as Nature and Science, he is the author of Global Energy Fundamentals (Cambridge University Press, 2020) and co-author of The Macroeconomics of Decarbonisation (Cambridge University Press, 2024).

    His columns and policy work are widely published and cited in leading international media such as the BBC, CNN, Financial Times, The New York Times, The Economist, The Guardian, The Wall Street Journal, Süddeutsche Zeitung, Frankfurter Allgemeine Zeitung, Corriere della Sera, Le Monde, El Pais, and several others.

    Simone also is a Member of the Board of Directors of the Clean Air Task Force (CATF). He holds a PhD in Institutions and Policies from Università Cattolica del Sacro Cuore. Born in the Dolomites in 1988, he speaks Italian, English and French.

  • Alessio Terzi

    Alessio Terzi, an Italian citizen, joined Bruegel in October 2013. Prior to this, Alessio was a Research Analyst in the EMU governance division of the European Central Bank. He has also worked for the macroeconomic forecasting unit of DG ECFIN (European Commission), the Scottish Parliament’s Financial Scrutiny Unit, and BMI Research (Fitch group), a country risk and forecasting firm in the City of London, where he was a Europe Analyst.

    He holds a Bachelor's degree in International Economics from Bocconi University and an MPA in European Economic Policy from the London School of Economics, where he specialised in public economics. During his studies, he spent a semester at Dartmouth College (USA). Alessio’s main research interests include structural reforms, competitiveness, EMU governance, and the G20.

    Between 2016-2018, Alessio was a Visiting Fulbright Fellow at the Kennedy School of Government of Harvard University. He completed a PhD in Political Economy at the Hertie School of Governance in Berlin, with a thesis on economic growth, written under the supervision of prof. Henrik Enderlein, Dani Rodrik, and Jean Pisani-Ferry.

    He is fluent in Italian and English, has a good knowledge of French, and an intermediate level of German and Spanish.

    Declaration of interests 2015

    Declaration of interests 2016

    Declaration of interests 2017

  • Cecilia Trasi

    Cecilia works at Bruegel as a Research analyst. She completed a BSc in Economics at Università Cattolica in Milan, and then a Master's in Public Policy at the Hertie School in Berlin.

    Before joining Bruegel, Cecilia pursued a Blue Book traineeship at the European Commission in DG INTPA focusing on renewable energy and green hydrogen and cooperation with countries in Sub-Saharan Africa. During her studies, Cecilia worked at the Organisation for Economic Cooperation and Development (OECD) on private sector development and trade in the Eastern Partnership. Also, she was a research assistant at the Hertie School, investigating the effect of the rise of China on European governance in the areas of trade and finance.

    Cecilia is fluent in Italian and English and has a good command of German and French.

  • Laura Tyson

    Laura D. Tyson is the Richard C. Holbrooke Fellow at the American Academy in Berlin. She is a Distinguished Professor of the Graduate School and Faculty Director of the Institute for Business & Social Impact at the Haas School of Business, University of California, Berkeley. She chairs the Blum Center for Developing Economies Board of Trustees at UC Berkeley. From July 2018 to December 2018, she served as Interim Dean of Berkeley Haas. Previously, she was the Dean of London Business School (2002-2006) and the Dean of the Berkeley Haas (1998-2001). Tyson was a member of the US Department of State Foreign Affairs Policy Board (2011-2013) and a member of President Obama’s Council on Jobs and Competitiveness (2011-2013) and the President’s Economic Recovery Advisory Board (2009-2011). She served in the Clinton Administration as the Chair of the Council of Economic Advisers (1993-1995) and as Director of the National Economic Council (1995 – 1996). Tyson is a member of the Council on Foreign Relations and a senior external advisor at McKinsey Global Institute. She is a member of the Board of Directors of AT&T, CBRE Group Inc., Lexmark International Inc., Apex Swiss Holdings SARL and The Sustainability Accounting Standards Board Foundation. She serves on the advisory boards of The Rock Creek Group and Afiniti. She is a Global Economy Fellow of the Mastercard Center for Inclusive Growth and an Editorial Advisory Board Member of Y-Analytics. Tyson is the co-author of the World Economic Forum Annual Gender Gap Report and Leave No One Behind, a report for the United Nations High-Level Panel on Women’s Economic Empowerment. She has also written opinion columns for many publications including BusinessWeek, The New York Times and the Financial Times and is a regular contributor to Project Syndicate.

  • Reinhilde Veugelers

    Prof Dr. Reinhilde Veugelers is a full professor at KULeuven (BE) at the Department of Management, Strategy and Innovation.  She has been a Senior fellow at Bruegel since 2009.  She is also a CEPR Research Fellow, a member of the Royal Flemish Academy of Belgium for Sciences and of the Academia Europeana. From 2004-2008, she was on academic leave, as advisor at the European Commission (BEPA Bureau of European Policy Analysis).  She served on the ERC Scientific Council from 2012-2018 and on the RISE Expert Group advising the commissioner for Research.  She is a member of VARIO, the expert group advising the Flemish minister for Innovation. She is currently a member of the Board of Reviewing Editors of the journal Science and a co-PI on the Science of Science Funding Initiative at NBER.

    With her research concentrated in the fields of industrial organisation, international economics and strategy, innovation and science, she has authored numerous well cited publications in leading international journals.  Specific recent topics include novelty in technology development,  international technology transfers through MNEs, global innovation value chains, young innovative companies, innovation for climate change,  industry science links and their impact on firm’s innovative productivity, evaluation of research & innovation policy,  explaining scientific productivity,  researchers’ international mobility,  novel scientific research.

    Websites:
    https://feb.kuleuven.be/reinhilde.veugelers
    https://bruegel.org/author/reinhilde-veugelers/

  • Georg Zachmann

    Georg Zachmann is a Senior Fellow at Bruegel, where he has worked since 2009 on energy and climate policy. His work focuses on regional and distributional impacts of decarbonisation, the analysis and design of carbon, gas and electricity markets, and EU energy and climate policies. Previously, he worked at the German Ministry of Finance, the German Institute for Economic Research in Berlin, the energy think tank LARSEN in Paris, and the policy consultancy Berlin Economics.

  • John Zysman

    John Zysman is Professor Emeritus at UC Berkeley and co-founder/co-director of the Berkeley Roundtable on the International Economy. He received his BA from Harvard and his PhD from MIT. His work covers the implications of platforms and intelligent tools for work, entrepreneurship and international competition, and the economic challenges and opportunities of climate change and the green economy.

Related content

Dataset

European natural gas imports

This dataset aggregates daily data on European natural gas import flows and storage levels.

Georg Zachmann, Ben McWilliams, Ugnė Keliauskaitė and Giovanni Sgaravatti