This is not merely a matter of economic competitiveness, but equally concerns the long-term foundations of social prosperity, technological sovereignty and global responsibility. If the industrial core of the economy erodes, manifesting itself in declining competitiveness, the loss of highly skilled and well-paid industrial jobs, and increasing deindustrialisation, we must redefine the productive, technological and institutional foundations on which future value creation can be based.
Industrial policy describes the entirety of government measures aimed at shaping economic and technological development pathways. Its aim is to create framework conditions under which industrial enterprises can compete successfully on the international stage and tap into new growth potential. At the same time, it is evident that an industrial policy focused primarily on maintaining the status quo has its limits. Critics rightly point out that traditional instruments such as subsidies, tax breaks or protective measures can stabilise existing structures without sufficiently promoting necessary transformation processes.
This creates a tension: state intervention can ensure stability in the short term and limit systemic risks, but at the same time it can reduce the pressure to adapt and weaken long-term competitiveness. Industrial policy therefore necessarily operates within the tension between stabilisation and transformation – not as an either/or choice, but as a challenging balance between both objectives.
The experiences of the COVID-19 pandemic have highlighted this tension. Germany has undergone a partial paradigm shift in industrial and regulatory policy, moving away from pure market liberalism towards a more state-coordinated industrial policy (focused on resilience and economic security), in the course of which state intervention in supply chains, production capacities and strategic industries has been legitimised to an extent that was previously almost unimaginable.
