Coordination of Industrial Policy in the European Union

Richard E. Baldwin (1) , Philippe Martin (2)

1 IHEID - Institut de hautes études internationales et du développement
2 ECON - Département d'économie (Sciences Po)

Spillovers from national industrial policies can cause helpful or harmful competition among policy makers and helpful or harmful interactions among the targeted industries. As a result, it is not in general possible to say whether industrial policy coordination is good or bad. However, reaching agreement at the EU level on any type of policy - trade policy, monetary policy or industrial policy - is costly in terms of time, information, and political goodwill. The contrast between the vagueness of the benefits of coordination and the surety of the decision-making costs suggests that the EU has no need to set up a new institutional structure for coordinating industrial policy. In the few cases where the merits of coordination are obvious, such as public spending on R&D, they will be obvious to all and ad hoc cooperation will work.

Domaines: Economies et finances

Richard E. Baldwin, Philippe Martin. Coordination of Industrial Policy in the European Union. EIB Papers, 2006, 11 (1), pp.134-157. ⟨hal-01021298⟩