Policy brief

Rethinking industrial policy

Publishing date
16 June 2011

Industrial policy has a bad name: ‘picking winners’ and thus distorting competition, while exposing government to capture by vested interests. But there are reasons for a rethink. First, climate change: without government intervention to jump-start massive private investment in clean technologies, governments, by default, encourage investment in dirtier technologies. Second, a new post-crisis realism: laissez-faire complacency by many governments has led to mis-investment in the non-tradable sector at the expense of growth-rich tradables. Third, China – and some other emerging economies – are big deployers of growth-enhancing sectoral policies. The challenge for Europe is how it can design and govern sectoral policies that are competition-friendly and thus growth-enhancing.

About the authors

  • Philippe Aghion

    Philippe Aghion, a Non-resident Senior Fellow since September 2006 to 2016, was coordinating Bruegel's research project on higher education.

    He is the Robert C. Waggoner Professor of Economics at Harvard University, where he started teaching Economics in 2000. Previously, he held positions at the European Bank for Reconstruction and Development (EBRD) and taught at the Massachusetts Institute of Technology (MIT), Nuffield College (Oxford), and University College London.

    Philippe's research spans a broad array of fields including corporate finance, industrial organisation, political economy and macroeconomics. He is managing editor of the journal The Economics of Transition, which he launched in 1992.

  • Julian Boulanger

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