Green Industrial Policy and Development—Taking Advanced Economies Over?

Abstract

This chapter explores the factors behind the apparent superior performance of green industrial policy (GIP) in developmental states (exemplified by China), as compared with the inefficiencies of GIP in developed countries (exemplified by the USA). The specific context is the overwhelming export competitiveness of green energy industry (GEI) actors in developmental states. Two intuitive explanations are analysed critically: differences between the two country groups in (1) the objectives of GIP and the proxies that measure policy performance and in (2) the alignment of institutions and policies with the requirements of the growth phase of the industry life cycle. The chapter highlights that the institutional, operational and governance-related differences between these two country groups are less clear-cut than what is suggested in the literature. Turning to the prospects of GIP, the paper anticipates a turn of the tide in the ongoing global green race. It is argued that different phases in the industry life cycle are characterised by different drivers of growth. GEI actors in China displayed spectacular catching up and were forging ahead during the growth phase of the life cycle, when the development of green energy industries was driven by scale-up and progress along the learning curve. Since further development, in the current phase, is driven by complementarities and spillovers, ‘game is not over in the ongoing global green race’.