This paper asks to what extent recent European industrial policies were responses to an episode of crisis rather than more enduring policy changes in response to globalization and the knowledge-economy. We argue that the 2008 crisis and recent protectionist efforts provided policy-makers greater freedom of maneuver but structural policy reform was already underway in the 2000s. We find policy responses were shaped by three factors: policy legacies; a country's position in global value chains; or differing state traditions and capacities. The paper contributes to the understanding of the determinants of economic policy-making and the impact of crises.
This chapter retells the story of Spain’s and Korea’s upgrading from the perspective of state–firm coordination. The larger purpose is to showcase the book’s argument and its explanatory power. The chapter consists of six sections. After the chapter’s introduction, section 2.2 situates large Spanish and Korean firms and discusses their limitations. Section 2.3 defines upgrading as a coordination problem and explains why states were necessary for upgrading. Section 2.4 characterizes Spain’s and Korea’s pathways to upgrading and analyzes the factors that led each country to choose a particular strategy. Section 2.5 evaluates the outcomes of upgrading and discusses their broader socioeconomic implications. The final section concludes and makes a transition to the case studies discussed in the next chapters.
Generating sustainable growth and reaching advanced economy status Political economy; state depend on the ability of countries to host local, globally competitive activism; business firms in skill-, capital-, and knowledgeintensive industries. However, few government relationships; countries succeed. This paper asks whether state activism is necessary to industrial upgrading; late development foster economic transformation at high levels of complexity in the globalisation era, and if so, what strategies are effective. Using evidence from Spain's and Korea's ICT industries since the 1980s, the paper argues that state-firm coordination remains necessary to reach the efficiency frontier in complex industries. However, coordination has shifted from hierarchical structures to nonhierarchical models in which states and firms develop mutually agreed-upon working rules to reach beneficial outcomes. Nonhierarchical coordination may involve adopting different institutional configurations, depending on the identities and capabilities of firms and national governments and on the nature of linkages with other nations. These linkages may lead to alternative pathways to upgrading and diverse productive specialisations.
Is making semiconductors in Europe a good idea? With the introduction of the European Chips Act in early 2022, this is no longer an academic question. In this article we evaluate these plans in light of a wider—but remarkably one‐sided—debate on industrial policy in advanced capitalist economies. Instead of focusing on policymakers, as most students of industrial policy have done, we draw attention to two first‐order conditions that determine the chances of policy success: the existence of (proto‐)competitive incumbents, and the alignment of the policy objectives with the prevailing institutional framework. We rely on that framework to evaluate the successes and failures in European aerospace, German biotech, and French computers, before using these insights to evaluate the European Chips Act. Investing in manufacturing of mature chips is, in that light, not a good idea. We suggest, instead, that the EU should concentrate on market segments that leverage its high‐skill workplaces and world‐class research system, and in which Europe has either already developed a comparative advantage or will not find itself at an initial disadvantage.
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