The aim of this study is to critically examine the transformation of EU industrial policy, focusing on the shift from a predominantly market-oriented governance model to one characterized by strategic interdependence. We ask how this evolution influences the EU's ability to manage dependencies, secure critical inputs, and enhance its productive capabilities in an increasingly interconnected global economy. To achieve this, we employed a mixed-methods approach, combining qualitative analysis of EU policy documents and quantitative assessments of industrial performance metrics. Our findings indicate that the integration of traditional principles, such as the Single Market and competition, with strategic measures is vital for fostering resilience and competitiveness. We identify key challenges and opportunities that arise from this new approach, emphasizing the need for a balanced strategy that promotes both openness and strategic management. Overall, we conclude that the future of EU industrial policy will hinge on its capacity to navigate geopolitical complexities while ensuring sustainable growth and innovation within its industrial sectors. The study further examines how emerging technologies, skills, infrastructure and industrial ecosystems will shape Europe's future productive capacity. It considers whether EU intervention should focus on market-making, market-shaping, or a combination of both. Particular attention is given to the allocation of public resources according to their contribution to productivity, social welfare, strategic resilience and citizen utility per euro spent. We also assess the potential benefits and risks of a more integrated industrial governance structure, including the possibility of a strategic budget line under DG Industry linking people, organisations and technology. Finally, the study argues that European industrial policy should focus less on protecting existing firms and more on creating the conditions in which globally competitive industries and high-quality employment can emerge.

EU Industrial Policy, Strategic Interdependence, Market Governance, Economic Resilience, Policy Transformation, Qualitative Analysis, Quantitative Assessment, Stakeholder Insights, Global Economy, Supply Chain Management

1. Adler, Nancy & J., & Gundersen, A. (2008). International dimensions of organizational behavior (5th ed.). Thomson South-Western.

2. Aiginger, K., & Rodrik, D. (2020). Rebirth of industrial policy and an agenda for the future. Journal of Industry, Competition and Trade, 20, 189–207. https://doi.org/10.1007/s10842-019-00322-3

3. Baldwin, R. (2016). The great convergence: Information technology and the new globalization. Harvard University Press. https://www.hup.harvard.edu/books/9780674660489

4. Blauberger, M. (2009). Of “good” and “bad” subsidies: European state aid control through soft and hard law. Journal of Common Market Studies, 47(5), 719–741. https://doi.org/10.1111/j.1468-5965.2009.02002.x

5. Bongardt, A., & Torres, F. (2022). The competitiveness and cohesion of the European Union: The role of industrial policy. Intereconomics, 57(2), 78–83. https://www.intereconomics.eu/

6. Bradford, A. (2020). The Brussels effect: How the European Union rules the world. Oxford University Press. https://doi.org/10.1093/oso/9780190088583.001.0001

7. Brunnermeier, M. K., James, H., & Landau, J.-P. (2016). The euro and the battle of ideas. Princeton University Press. https://press.princeton.edu/books/hardcover/9780691173005/the-euro-and-the-battle-of-ideas

8. Bulfone, F. (2022). Industrial policy and the European Union: From market failure to strategic autonomy. [Journal/source details should be verified against the version you are using].

9. Celi, G., Guarascio, D., & Reljic, J. (2022). The asymmetric impact of the COVID-19 crisis on EU member states: Industrial policy and economic resilience. Structural Change and Economic Dynamics, 61, 1–13. https://doi.org/10.1016/j.strueco.2022.02.004

10. Chang, H.-J. (2002). Kicking away the ladder: Development strategy in historical perspective. Anthem Press. https://anthempress.com/kicking-away-the-ladder-pdf

11. Cimoli, M., Dosi, G., & Stiglitz, J. E. (Eds.). (2009). Industrial policy and development: The political economy of capabilities accumulation. Oxford University Press. https://global.oup.com/academic/

12. Di Carlo, D., McNamara, K. R., & Moschella, M. (2026). The new politics of EU industrial policy: From the regulatory state to a transformational state. Governance, 39(3). https://doi.org/10.1111/gove.70133

13. Di Carlo, D., & Schmitz, L. (2023). Europe's new industrial policy: An analysis of the EU's emerging developmental network state. Journal of European Public Policy, 30(10), 1950–1977. https://doi.org/10.1080/13501763.2022.2127414

14. Dermine, P. (2026). Industrial policy in the European Union: Between coordination and fragmentation. Governance. Advance online publication. https://doi.org/10.1111/gove.70085

15. Draghi, M. (2024). The future of European competitiveness: Part A—A competitiveness strategy for Europe. European Commission. https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en

16. Edler, J., & Georghiou, L. (2007). Public procurement and innovation—Resurrecting the demand side. Research Policy, 36(7), 949–963. https://doi.org/10.1016/j.respol.2007.03.003

17. European Commission. (2010). Europe 2020: A strategy for smart, sustainable and inclusive growth (COM/2010/2020 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52010DC2020

18. European Commission. (2019). The European Green Deal. https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en

19. European Commission. (2020a). A new industrial strategy for Europe (COM/2020/102 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC0102

20. European Commission. (2020b). An SME strategy for a sustainable and digital Europe (COM/2020/103 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC0103

21. European Commission. (2021a). Strategic dependencies and capacities. Publications Office of the European Union. https://op.europa.eu/

22. European Commission. (2021b). Updating the 2020 new industrial strategy: Building a stronger Single Market for Europe's recovery (COM/2021/350 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021DC0350

23. European Commission. (2021c). Trade policy review: An open, sustainable and assertive trade strategy (COM/2021/66 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021DC0066

24. European Commission. (2022a). European Chips Act. https://digital-strategy.ec.europa.eu/en/policies/european-chips-act

25. European Commission. (2022b). REPowerEU plan (COM/2022/230 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52022DC0230

26. European Commission. (2023a). An EU approach to enhance economic security (JOIN/2023/20 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52023JC0020

27. European Commission. (2023b). European economic security strategy (JOIN/2023/20 final). https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-economic-security-strategy_en

28. European Commission. (2023c). European Green Deal: Delivering on our climate objectives. https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en

29. European Commission. (2025a). A competitiveness compass for the EU (COM/2025/30 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52025DC0030

30. European Commission. (2025b). The Clean Industrial Deal: A joint roadmap for competitiveness and decarbonisation (COM/2025/85 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52025DC0085

31. European Commission. (2025c). Delivering on the Clean Industrial Deal I (COM/2025/378 final). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52025DC0378

32. European Council. (2000). Presidency conclusions: Lisbon European Council, 23 and 24 March 2000. https://www.consilium.europa.eu/

33. European Council. (2022). The Versailles declaration, 10–11 March 2022. https://www.consilium.europa.eu/en/press/press-releases/2022/03/11/statement-of-the-members-of-the-european-council-10-11-march-2022/

34. European Parliament & Council of the European Union. (2023a). Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism. Official Journal of the European Union, L 130, 52–104. https://eur-lex.europa.eu/eli/reg/2023/956/oj

35. European Parliament & Council of the European Union. (2023b). Regulation (EU) 2023/1781 of the European Parliament and of the Council of 13 September 2023 establishing a framework of measures for strengthening Europe's semiconductor ecosystem. Official Journal of the European Union, L 229, 1–53. https://eur-lex.europa.eu/eli/reg/2023/1781/oj

36. European Parliament & Council of the European Union. (2024a). Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a framework for ensuring a secure and sustainable supply of critical raw materials. Official Journal of the European Union, L. https://eur-lex.europa.eu/eli/reg/2024/1252/oj

37. European Parliament & Council of the European Union. (2024b). Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of measures for strengthening Europe's net-zero technology products manufacturing ecosystem. Official Journal of the European Union, L. https://eur-lex.europa.eu/eli/reg/2024/1735/oj

38. Farrell, H., & Newman, A. L. (2019). Weaponized interdependence: How global economic networks shape state coercion. International Security, 44(1), 42–79. https://doi.org/10.1162/isec_a_00351

39. Freeman, C. (1987). Technology policy and economic performance: Lessons from Japan. Pinter Publishers. https://www.routledge.com/

40. Gereffi, G. (2018). Global value chains and development: Redefining the contours of 21st century capitalism. Cambridge University Press. https://doi.org/10.1017/9781316227930

41. Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78–104. https://doi.org/10.1080/09692290500049805

42. Hoekman, B. (2022). Rebooting multilateral trade cooperation: Perspectives from Europe. CEPR Press. https://cepr.org/publications/books-and-reports/rebooting-multilateral-trade-cooperation

43. Hornkohl, L., & Pelekis, P. (2026). State aid and the European Union's industrial policy: From competition control to industrial coordination. Yearbook of European Law. Advance online publication. https://doi.org/10.1093/yel/yeag004

44. International Energy Agency. (2022). The role of critical minerals in clean energy transitions. https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions

45. Johnson, C. (1982). MITI and the Japanese miracle: The growth of industrial policy, 1925–1975. Stanford University Press. https://www.sup.org/books/title/?id=2661

46. Kok, W., et al. (2004). Facing the challenge: The Lisbon strategy for growth and employment. European Communities. https://op.europa.eu/

47. Krugman, P. (1994). Competitiveness: A dangerous obsession. Foreign Affairs, 73(2), 28–44. https://doi.org/10.2307/20045917

48. Landesmann, M., & Stöllinger, R. (2020). The European Union: A developmental state? Journal of Industry, Competition and Trade, 20, 627–649. https://doi.org/10.1007/s10842-019-00330-3

49. Lundvall, B.-Å. (Ed.). (1992). National systems of innovation: Towards a theory of innovation and interactive learning. Pinter Publishers. https://www.routledge.com/

50. Mcnamara, Kathleen “Transforming Europe? The EU’s industrial policy and geopolitical turn”, Journal of European Public Policy,2024.

51. Majone, G. (1994). The rise of the regulatory state in Europe. West European Politics, 17(3), 77–101. https://doi.org/10.1080/01402389408425031

52. Majone, G. (1997). From the positive to the regulatory state: Causes and consequences of changes in the mode of governance. Journal of Public Policy, 17(2), 139–167. https://doi.org/10.1017/S0143814X00003524

53. Mazzucato, M. (2013). The entrepreneurial state: Debunking public vs. private sector myths. Anthem Press. https://anthempress.com/the-entrepreneurial-state-hb

54. Mazzucato, M. (2018). Mission-oriented innovation policies: Challenges and opportunities. Industrial and Corporate Change, 27(5), 803–815. https://doi.org/10.1093/icc/dty034

55. Meunier, S., & Nicolaïdis, K. (2006). The European Union as a conflicted trade power. Journal of European Public Policy, 13(6), 906–925. https://doi.org/10.1080/13501760600832623

56. Nelson, R. R. (Ed.). (1993). National innovation systems: A comparative analysis. Oxford University Press. https://global.oup.com/academic/

57. Pisani-Ferry, J. (2023). The geopolitical consequences of the green transition. European Council on Foreign Relations. https://ecfr.eu/publication/the-geopolitical-consequences-of-the-green-transition/

58. Porter, M. E. (1990). The competitive advantage of nations. Free Press. https://www.simonandschuster.com/

59. Rodrik, D. (2004). Industrial policy for the twenty-first century (John F. Kennedy School of Government Working Paper No. RWP04-047). Harvard University. https://drodrik.scholar.harvard.edu/publications/industrial-policy-twenty-first-century

60. Rodrik, D. (2004). Industrial policy for the twenty-first century (CEPR Discussion Paper No. 4767). Centre for Economic Policy Research. https://cepr.org/publications/dp4767

61. Schmitz, L., & Seidl, T. (2023). Asymmetric climate policies and the European Union's geoeconomic power. Journal of European Public Policy, 30(9), 1856–1881. https://doi.org/10.1080/13501763.2022.2142458

62. Schumpeter, J. A. (1942). Capitalism, socialism and democracy. Harper & Brothers. https://archive.org/details/capitalismsocial00schu

63. Tooze, A. (2021). Europe's economic sovereignty and the geopolitics of industrial policy. European Council on Foreign Relations. https://ecfr.eu/

64. World Trade Organization. (2023). World trade report 2023: Re-globalization for a secure, inclusive and sustainable future. https://www.wto.org/english/res_e/booksp_e/wtr23_e/wtr23_e.htm

65. Yellen, J. L. (2022, April 13). Remarks by Secretary of the Treasury Janet L. Yellen on way forward for the global economy. U.S. Department of the Treasury. https://home.treasury.gov/news/press-releases/jy1162