What determines the success and failure of industrial policies in Europe?

Since 2021, the US, the European Union, Japan and Korea and, of course, China, have earmarked over $1 trillion to create or strengthen competitive advantage in new or existing industries deemed strategic and stimulate the green transition. Which policies are likely to fail, and why, and why are some policies more likely to work?

In a in a new article for the LSE European Politics and Policy (EUROPP) Blog which draws on their recent paper published in the Socio-Economic Review, our Visiting Senior Fellow Dr Bob Hancké and Angela Garcia Calvo have tried to think more systematically about this question, identify the conditions for industrial policy failure and success, and present a framework to help policymakers make more informed strategic decisions.

Even the best designed industrial policies will fail if they go against the grain of institutions and if they cannot build on existing industrial strengths.