Environmental Policy as a Core Element of Systemic Industrial Policy to Encourage Sustainable Economic Growth

Industrial policy is back on the agenda and the consensus is that this time it must be different from the past. We redefine industrial policy for industrialised countries as a strategy to promote "high-road competitiveness", understood as the ability of an economy to achieve "beyond-GDP" goals. "High-road strategies" are based on advanced skills, innovation, supporting institutions, ecological ambition and a social policy that has an activating effect. This "new industrial policy" is systemic, working in alignment with other policy strands and supporting social and environmental goals; it affects the structure of the economy as a whole and not just the manufacturing sector. Short-term activities, such as protecting employment in unviable companies, low prices for fossil fuels, or reducing wages in high-income economies are counterproductive. To pursue an industrial policy that targets society's ultimate goals without public micromanagement will be challenging. It could be achieved by setting incentives, particularly ones that impact on technical progress, by using the important role governments have in the education and research sectors, by raising public awareness and by harnessing consumer preferences that call for socio-ecological transition.