Article 9 of 20 – “Exploring the re-emergence of industrial policy”

Yep, this is exactly what I needed; clarity about what industrial policy is and isn’t and how it overlaps with sustainability transitions literatures and an sstounding reference list

Johnstone et al (2021) Exploring the re-emergence of industrial policy: Perceptions regarding low-carbon energy transitions in Germany, the United Kingdom and Denmark Energy Research & Social Science Volume 74, April 2021, 101889

The abstract lays it out

The purpose of the piece is clear –

…while we have witnessed a variety of proposals for green industrial policies, so far there has been little attention in the sustainability transitions literature on what the role of industrial policy has been so far in transition processes. Additionally, there is a need to guard against a ‘one size fits all’ approach to industrial policy, and to appreciate the ‘variety’ of industrial policies in different national [33] and regional [2] contexts. This present analysis contributes to such an understanding. (Johnstone et al. 2021:xx)

They list their research questions

First, we explore the different styles of industrial policy in the three case studies (RQ1). Second, we examine whether and how industrial policy has been perceived to enable or hinder low-carbon energy transitions (RQ2).

And their methods

Altogether 48 expert interviews were conducted during November 2016 – March 2017 (see Table 1), conducted by three of the authors, each responsible for one country

They come up with some interesting compare-and-contrasts for the three countries. I’ve since had a root around in some of the secondary literature (TUC and the Energy Intensive Users Group) that might have been worth a critique, but space was limited, and this is a HUGE effort, going through all those interviews, coding, nutting out what matters etc.

I need to think about the previous paper, also the notion of “technological overlaps” alongside complementary assets, regulatory (and other forms) of capture… Hmmmmm. Much much much to ponder here.

Excerpts (only some of the many many brilliant ones)

 Industrial policy has been defined as “structural policies designed to strengthen the efficiency, scale and international competitiveness of domestic industrial sectors, typically containing an element of national champions, of self-reliance in bringing about growth and development” ([1]: 273).

(Johnstone et al. 2021:xx)

 Green industrial policy, broadly defined as “government intervention to hasten the restructuring of the economy towards environmental sustainability” ([12]: 522), has limited grounding in the traditional industrial policy literature [13]. A key aspect of green industrial policy is shifting economic trajectories away from traditional industries towards new, ‘greener’ technological industrial futures, for example, by expanding industrial capacities around renewable energy manufacture [10,14].

(Johnstone et al. 2021:xx)

Industrial policy is a broad term capturing different manifestations and forms of policy intervention [37,38]. At its broadest, industrial policy has been defined as “…a variety of public actions aimed at guiding and controlling the structural transformation process of an economy” ([39]: 3), and, more specifically, “policies by which governments attempt to shape the sectoral allocation of the economy” ([40]: 43). Industrial policy can be explicit or implicit, intentional or unintentional but, in effect it has typically meant that certain industries are favoured more than others [6]. Most countries pursue industrial policy through “any government decision, regulation or law that encourages ongoing activity or investment in an industry” ([41]: 23). In practice, this is likely to require elements of policies, such as visions, instruments and coordinated governance in different policy domains, such as educational, innovation, economic and financial policies, allowing industries to develop “economies of scale and become lowest cost producers” ([41]: 25).

(Johnstone et al. 2021:xx)

However, as noted above, in the wake of the financial crisis of 2008, the renewed interest in industrial policy has been driven by two main factors. First, a need to re-stimulate growth and employment as a response to the economic crisis raising concerns over structural imbalances in the economy and the prevalence of market failures, recognising the political economy of market bail-outs, and the success of the emerging market economies [55]. Second, a number of societal objectives, such as moving towards low-carbon and resource efficient societies, have been connected with the creation of a learning economy, addressing distributional issues and promoting employment [6].

(Johnstone et al. 2021:xx)

Pegels and Lütkenhorst [12] define green industrial policy as “government intervention to hasten the restructuring of the economy towards environmental sustainability” and outline four factors of importance: inducing innovation, creating jobs, mitigating climate change, and minimising cost to consumers. They point out that international trade is a key consideration, with tariff protection, favourable customs and excise taxes, and ‘local content requirements’ representing potential instruments for protecting domestic manufacturing and fostering internationally competitive industries. A variety of policy instruments has been identified as green industrial policy. For example, Schwarzer [14] differentiates between regulatory and control mechanisms, environmental taxes, industry protection, and industry support mechanisms.

(Johnstone et al. 2021:xx)

References to chase up

[1] L. Soete, From Industrial to Innovation Policy, Journal of Industry, Competition and Trade 7 (3-4) (2007) 273–284, https://doi.org/10.1007/s10842-007-0019-5.

[6] J. Stiglitz, J. Yifu, C. Monga, Introduction: The Rejuvenation of Industrial Policy, in: J. Stiglitz, J. Yifu, C. Monga (Eds.), Ind. Policy Revolut., New York: Palgrave Macmillan, 2013: pp. 1–18

[12] A. Pegels, W. Lütkenhorst, Is Germany’s energy transition a case of successful green industrial policy? Contrasting wind and solar PV, Energy Policy 74 (2014) 522–534, https://doi.org/10.1016/j.enpol.2014.06.031.

[37] C. Dh´eret, M. Morosi, A. Frontini, A. Hedberg, R. Pardo, Towards a New Industrial Policy for Europe, Brussels, 2014. https://dx.doi.org/ISSN1782-494X.

[38] E. Stolingen, Industrial Policy, Technology, and International Bargaining: Designing Nuclear Industries in Argentina and Brazil, Stanford University Press, Stanford, 1996.

[41] J. Yifu Lin, C. Monga, Comparative advantage: the silver bullet of industrial policy, in: Ind. Policy Revolut., International Economic Association Series, 2013: pp. 19–38.

[55] K. Warwick, Industrial Policy: Emerging Issues and New Trends, in: Babbage Ind. Policy Netw. Lect. Ser., University of Cambridge, Cambridge, 2013. http://www. ifm.eng.cam.ac.uk/uploads/Research/Babbage/Ken_Warwick.pdf.

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