Europe first? The rise of EU industrial policy promoting and protecting the single market

Abstract

ABSTRACT Within Europe’s regulatory state, industrial policy has largely remained within national governments’ remit. Yet, a plethora of new supra- and cross-national industrial policy initiatives have recently emerged whereby the Commission proactively engages in pan-European activities to foster innovation and economic development. This article brings the ‘Developmental Network States’ (DNS) literature into dialogue with EU integration scholarship to explain both the timing of EU industrial policy’s rise since the mid-2010s and the variation in forms of EU integration of different industrial policy functions. Our analysis suggests that the Commission increasingly operates four major developmental functions akin to DNSs and aimed at promoting and protecting the single market. Neofunctionalist theories of EU integration explain these momentous shifts. The timing behind the rise of EU industrial policy is best explained as an interplay of functional, cultivated, and political spillovers, driven especially by the Franco-German realignment on pro-EU industrial policy positions since 2016. Variation in the governance forms of integrated EU industrial policy functions is instead explained in terms of the degree of pre-existing integration of extant policies, the low vs high politics nature of the policy domain and the types of externalities attached to the specific policy area.