Industrial Transformation in the Aftermath of the Crisis: An Empirical Analysis of Industrial Policies in the UK, Germany, France and Spain

Understanding the drivers of industrial transformation is a major focus of studies of capitalism. The financial crisis and the Great Recession undermined the neoliberal assumption that markets know best. The varieties of capitalism firm-centric approach and its emphasis on path dependence and stable equilibria, offer limited tools to understand processes of change that require correcting significant flaws in national industrial structures or laying the foundations for new industries of the future. Finally, the statist literature does not fully take into consideration the state’s limitations in terms of information and self-organisation capacity.

This paper gauges the forces and structures that determine industrial transformation through an analysis of industrial policy strategies in four large European economies since the early 2000s. The UK, Germany, France and Spain, represent archetypical capitalist models with different institutional legacies. Industrial policies are a critical example of national efforts to drive industrial transformation. Furthermore, industrial policy has received a significant boost at national and European levels following the financial crisis and attendant recession, which makes a comparative analysis timely. 

The paper acknowledges the persistence of path-dependent national patterns but also reveals considerable efforts to move beyond existing comparative advantages. As economic models approach exhaustion firms remain crucial actors, but states also have an important role to play in shifting to a new competitive equilibrium. Considerable limitations in firm and state capacity foster the development of non-hierarchical coordination mechanisms through which states and firms seek to complement their capabilities, exchange crucial information, and further their objectives.