PARIS – The German and French governments have been scrambling to save their automobile and truck industries though big fiscal injections, making it clear that, within much of the European Union, industrial policy has returned with a vengeance. But, throughout last year, French, German, and other EU leaders worked against rather than with each other when putting their policies in place. As a result, some European industries got undue protection, while others were squeezed out of the market.
The lesson is clear: European governments must work together when implementing industrial policy. But they also need to do much more to promote innovation and competitiveness.