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Copyright

Karl Aiginger

Published On

2024-12-11

Page Range

pp. 99–108

Language

  • English

Print Length

10 pages

6. A New Industrial Policy as the Key to the Green Transition

  • Karl Aiginger (author)
The world is changing quickly. The former Soviet Union is gone and its successor, Russia, is seeking to reclaim parts of Soviet territory using military force. The United States (US) as a sole remaining superpower cannot take the lead, due to populism, failed democracy, and a lack of resilience. China is on the rise, but autocratic, longing for resources and facing a declining population. Europe is less dynamic and innovative, not yet seen as unified with common goals. New middle powers are gaining shares in production, but are themselves very different. The problems the world faces are changing: peace is no longer guaranteed, global warming is accelerating, poverty is on the decline but re emerging in other ways, and migration policy is becoming more and more important. The green transition may be an engine of change and new dynamics, but there are also many backlashes. In this situation, a new industrial policy is needed—one very different from that of the past. We begin by describing the past policy as an isolated policy, along with the questions of whether such a policy is needed in a capitalistic economy and whether it should focus on “important sectors” (the sectoral or French approach) or “important activities” (the horizonal or German approach). We then turn to the increasing importance of international exports/ investments and the necessity for a green transition, but also new forms of protectionism and backlashes. This chapter builds on Aiginger and Rodrik (2020) with respect to “industrial policy for the 21st century”, as well as on Aiginger and Ketels (2024) for its “reloading” after the most recent changes in the policy environment.

Contributors

Karl Aiginger

(author)

Karl Aiginger was born in Vienna on October 23, 1948. He is director of the Policy Crossover Center: Vienna—Europe (www.euiopaplattform.at). He is Professor at the Vienna University of Economics and Business and is an Honorary Professor at the University of Linz. He is Editor-in-Chief of the Journal of Industry, Competition and Trade (JICT). He has been the Director of the Austrian Institute of Economic Research (WIFO) from 2005 to 2016 and Coordinator of the research project “New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition”—WWWforEurope (http://Synthesis-Report-Part-I.foreurope.eu). He had temporary commitments at Stanford University, MIT, UCLA, and at the University of Changsha (Hunan, China). His research foci are industrial economics, competitiveness, and strategies of firms, regions and countries. The Policy Crossover Center published studies on “More or Less Europe”, Europe taking the lead in responsible globalization, and a European partnership policy with the South and the East.