Industrial Policy in the EU: Unequal Subsidy Provision?
About this Session
Time
Thu. 16.04. 15:55
Room
Lobby
Speaker
by Alessia Invernizzi and Ryan Pike
Europe faces a competition and coordination challenge as it seeks to modernize its industrial base and support green and digital transitions. This paper investigates how the Recovery and Resilience Facility (RRF), the EU’s flagship post-COVID recovery instrument, shapes the adoption of EU-prioritized sectors across member states. Building on Competence–Control (CC) theory, we conceptualize the Commission’s role as orchestrator in recent European industrial policy. We examine whether supranational incentives lead to sustained alignment, temporary convergence, or uneven spillover effects favoring wealthier states. Using Global Trade Alert data on subsidies and the RRF Sectoral Database, we show that the RRF produces a short-term increase in sectoral adoption of green and digital priorities, but alignment diminishes over time, and resource allocation reflects pre-existing structural disparities. By situating subsidy provision within broader market coordination mechanisms, this study contributes to the literature on the revival of industrial policy, shedding light on the conditions that enable—and constrain—collective action in shaping the Single Market.
Europe faces a competition and coordination challenge as it seeks to modernize its industrial base and support green and digital transitions. This paper investigates how the Recovery and Resilience Facility (RRF), the EU’s flagship post-COVID recovery instrument, shapes the adoption of EU-prioritized sectors across member states. Building on Competence–Control (CC) theory, we conceptualize the Commission’s role as orchestrator in recent European industrial policy. We examine whether supranational incentives lead to sustained alignment, temporary convergence, or uneven spillover effects favoring wealthier states. Using Global Trade Alert data on subsidies and the RRF Sectoral Database, we show that the RRF produces a short-term increase in sectoral adoption of green and digital priorities, but alignment diminishes over time, and resource allocation reflects pre-existing structural disparities. By situating subsidy provision within broader market coordination mechanisms, this study contributes to the literature on the revival of industrial policy, shedding light on the conditions that enable—and constrain—collective action in shaping the Single Market.