The European Industrial Policy "Triangle"

This chapter sheds light on the “new” European industrial policy that has been coming to the fore ‒ in great part thanks to the efforts of the Brussels Commission ‒ since the beginning of the 21st century. The new approach that has evolved has become known as the “integrated” approach, due to its emphasis on integrating some of the fundamental “vertical applications” within the traditional “horizontal approach”. In so doing, the crucial development lies in the EU’s technology policy (R&D, human capital), a policy that should be given the same importance, on an EU-wide level, that is already afforded to the two other sides of the “Triangle of Industrial Policy”: competition policy and trade policy. The fundamental theoretical position around which a proposal for a supranational policy-making approach to R&D, innovation, and human capital must develop is that which the author calls the “Jacquemin-Rodrik Synthesis”. On one side, we find the gap between the EU and the US as regards all of these aspects (the paper gives a quantified measurement of this). On the other side, we find the teachings of both Alexis Jacquemin (the 1980s) and Dani Rodrik (the 2000s): their theories suggest that the quintessence of economic development is “structural transformation”; in other words, the rise of new industries. These are increasingly more science-based in today's world. The manufacturing renaissance that the entire Western world is undergoing thus offers an opportunity to implement a new industrial policy directed first and foremost toward knowledge-based investments. In the specific case of the EU member states, this means abandoning essentially national policies, which by their very nature are fragmented, and coming together as a Union that can speak with a “single voice” in all areas relevant to microeconomic reforms.