ABSTRACT
This chapter reviews the historical evolution of the theory of development and the very concept of industrial policy. It outlines the background for analysis of the evolution of this concept within the European Commission as well as the debate on the industrial policies required to sustain and rebalance growth within the European Union. 'Industrial policy' came to identify the set of policies aiming to change the structure of the economy with a deliberate, intensive and guided effort. The authors distinguish three phases in European industrial policy: from product market intervention, to laissez-faire policies, to interventions increasingly focused on supporting 'innovative', science-based sectors. The success of the new European industrial policy in reducing the gap between the various regions of the Eurozone depends on three factors: sufficient funding; ensuring that latecomer countries can participate on an equal footing; and coordination across all levels. The authors conclude with an assessment of two examples of implementation of industrial policy.
