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Industrial Policy: A Dying Breed or A Re-emerging Phoenix Karl Aiginger Received: 31 March 2007 /Revised: 31 May 2007 / Accep ted: 8 June 2007 / Publis hed online: 26 July 2007 # Springer Science + Business Media, LLC 2007 Abstract Real worl d in dust rial po lic y is of ten po or ly desi gn ed an d al wa ys he av ily opposed. Good intentions are overshadowed by bad outcomes. However, no commonly accepted definition exists; concepts differ across nations, regions, stage of development and over time. After switching from the sectoral to the horizontal approach  — and facing never ending problems with targeting, large projects and specific technologies  — industrial policy seemed to phase out at the end of the last century. Recently, interest has re-emerged, due to globalisation, outsourcing, low growth and high unemployment (specifically in Europe). We present evidence on past strategies and the performances of various concepts. We descri be the new “mat rix app ro ach to industrial pol icy ” dev elo ped by the Eur ope an Commission. Finally, we venture to define elements of a “Systemic Industrial Policy”. This new type of industrial policy differs decisively from policies of the past, and has been receiving an impetus from the EU “Lisbon Strategy”, as well as from the rise of China and the new EU member countries. It is the complementary policy to globalisation, increasing its benefits and empowering and retraining potential losers. Systemic Industrial Policy supports basic education, training and entrepreneurship in developing countries, promotes FDI and exports in catching-up economies and merges with innovation strategies, cluster  policy and dynamic competitiveness in high income countries. It goes beyond combating market failures, as it builds on economic laws, comparative and competitive advantages and changing specialisation patterns. It acknowledges limited knowledge of policy makers, mutual learning and co-operation between firms, institutions and government. Keywords indus trial polic y . competitiveness . innovation stra tegy . dyn ami c mar ket failures JEL Classification D78 . L16 . L52 .  N60 . O25 . O38 J Ind Compet Trade (2007) 7:297  – 323 DOI 10.1007/s10842-007-0025-7 K. Aiginger (*) Austrian Institute of Economic Research, Vienna, Austria e-mail: [email protected] 

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http://www.rieti.go.jp/en/events/bbl/04070101.pdf
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http://www.princeton.edu/~jjun/webs/PIIRS/papers/ElieCohen.pdf
http://www.princeton.edu/~jjun/webs/PIIRS/papers/ElieCohen.pdf
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