Duso, Tomaso; Go nig, Ma in; Schie sch, Alexande
A icle
Fo a S a egic, Eu opean and Compe i ion-O ien ed
Indus ial Policy
In e economics
Sugges ed Ci a ion: Duso, Tomaso; Go nig, Ma in; Schie sch, Alexande (2025) : Fo a S a egic,
Eu opean and Compe i ion-O ien ed Indus ial Policy, In e economics, ISSN 1613-964X, Sciendo,
Wa saw, Vol. 60, Iss. 4, pp. 215-220,
h ps://doi.o g/10.2478/ie-2025-0042
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/325277
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by/4.0/
ZBW – Leibniz In o ma ion Cen e o Economics 215
Fo um
Tomaso Duso, Ma in Go nig and Alexande Schie sch
Fo a S a egic, Eu opean and Compe i ion-
O ien ed Indus ial Policy
The compe i i eness o Ge man indus y is unde signi ican p essu e. While poli icians
acknowledge he need o change, hei p oposed solu ions emain ague and lack a clea
s a egic di ec ion. Cu en app oaches ocus on ax elie , b oad in es men subsidies o
domes ic i ms o a ge ed cos educ ions, such as lowe elec ici y p ices. While hese
measu es may imp o e p oduc ion condi ions, hey ail o add ess he undamen al issue: he
echnological in es men ap. To o e come he cu en in es men s agna ion, a Eu opean,
s a egic and compe i ion-o ien ed indus ial policy is essen ial. Ge many’s and Eu ope’s long-
e m compe i i eness depends on a ge ed in es men s in inno a i e echnologies and u u e-
o ien ed p ojec s while a oiding ma ke -dis o ing subsidies and ine icien inancial suppo .
© The Au ho (s) 2025. Open Access: This a icle is dis ibu ed unde he
e ms o he C ea i e Commons A ibu ion 4.0 In e na ional License
(h ps://c ea i ecommons.o g/licenses/by/4.0/).
Open Access unding p o ided by ZBW – Leibniz In o ma ion Cen e
o Economics.
In e economics, 2025, 60(4), 215-220
JEL: L52, H23, Q41
DOI: 10.2478/ie-2025-0042
Tomaso Duso, Ge man Ins i u e o Economic Re-
sea ch (DIW Be lin), Ge many; and Technische Uni-
e si ä Be lin, Ge many.
Ma in Go nig, Ge man Ins i u e o Economic
Resea ch (DIW Be lin), Ge many; and Technische
Uni e si ä Be lin, Ge many.
Alexande Schie sch, Ge man Ins i u e o Eco-
nomic Resea ch (DIW Be lin), Ge many.
Ge man indus y plays a key ole in he Eu opean Union’s
economy, no only because o i s size bu also due o i s
s a egic impo ance wi hin alue chains. Ge man au o-
mobiles, machine y and equipmen in eg a e nume ous
componen s p oduced in o he Eu opean coun ies. This
makes i all he mo e wo ying ha he bad news om
Ge man indus y has been pe sis en , pa icula ly e-
ga ding speci ic companies. Volkswagen – a lagship o
Ge many’s indus ial model – is expec ed o implemen
signi ican cu s o i s co e VW b and. Es ablished i ms
such as Miele, BASF, ThyssenK upp, Siemens and ZF
F ied ichsha en a e announcing d as ic job cu s. Mo eo-
e , acco ding o indus y associa ions, he s a e o Ge -
many’s indus ial sec o is di e. Taxes, wages and ene gy
cos s a e epo edly oo high, leading o he imp ession
ha i is only a ma e o ime be o e Ge many’s indus ial
ligh s go ou .1
A look a o icial s a is ics, howe e , p esen s a a less
d ama ic pic u e (Figu e 1). Al hough eal indus ial g oss
alue added in Ge many in 2024 is sligh ly below he peak
alues om be o e he co ona i us c isis, i is signi ican ly
highe han in he yea s be o e 2015. Likewise, no clea
deindus ialisa ion end is e iden compa ed o o e all
economic de elopmen – un il now. Howe e , we also
see a s agna ion since 2017. Hence, while signi ican eco-
nomic losses ha e been a oided so a , he e is ob iously
need o ac ion.
Is i mainly a p oblem o (ene gy) cos s ha calls o
a ho izon al indus ial policy?
Secu ing Ge many’s indus ial base is a widely ecog-
nised goal in domes ic policy discussions. Howe e , he
s a egies o achie e his emain la gely unclea . Pa y
p og ammes mainly p opose adi ional economic meas-
u es such as ax cu s and b oad in es men subsidies
o domes ic companies. Lowe elec ici y cos s a e also
hea ily discussed. Acco ding o he Fede al S a is ical
O ice, all non-household consume s a e cu en ly pay-
ing abou 30% mo e o elec ici y han be o e Russia’s
in asion o Uk aine.2 This inc ease would likely ha e been
e en highe had he p e ious go e nmen no signi ican ly
educed axes and le ies on elec ici y o coun e soa ing
p oduc ion cos s. Cu en ly, all poli ical pa ies suppo a
1 A nuanced pe spec i e abou he indus ial sec o in Ge many can be
ound in B and e al. (2022).
2 See Des a is (2025), Table 61241-16.
In e economics 2025 | 4
216
Fo um
Figu e 1
Real g oss alue added in Ge many
Index, 2000 = 100
Sou ce: Na ional accoun s, Fede al S a is ical O ice, 2025; au ho s’ own
calcula ions.
Figu e 2
Ra io o ene gy cos s o g oss p oduc ion alue in
he Ge man manu ac u ing indus y
in %
No es: The obse a ion uni s in he cha a e he so-called economic
classes, i.e. he lowes possible sec o al classi ica ion le el published by
he Fede al S a is ical O ice as pa o he cos s uc u e su ey in he
manu ac u ing indus y. A ound 87% o he o al g oss p oduc ion alue
o he manu ac u ing indus y is gene a ed by sec o s wi h an ene gy cos
sha e o 5% o less.
Sou ce: Cos s uc u e su ey o he Ge man manu ac u ing sec o , Fed-
e al S a is ical O ice, 2025; au ho s’ own calcula ions.
80
90
100
110
120
130
140
150
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Manu ac u ing indus y
To al economy
0
10
20
30
40
0
20
22.5
25
27.5
30
32.5
35
37.5
40
42.5
45
47.5
50
52.5
55
57.5
60
65
67.5
70
72.5
75
77.5
80
82.5
85
87.5
90
95
Ra io o ene gy cos s o
Cumula i e sha e in o al g oss p oduc ion alue
o he manu ac u ing sec o
g oss p oduc ion alue
97.5
100
u he capping o g id ees and a educ ion o le ies and
axes on elec ici y. Unlike he con o e sial p oposal o
a so-called indus ial elec ici y p ice discussed las yea ,
hese measu es would bene i no only ene gy-in ensi e
indus ies bu also all businesses and consume s (see
Be nha d e al., 2023).
While i undoub edly makes sense o policymake s o
mi iga e he impac o ex e nal p ice shocks h ough ax
elie , especially as axes and le ies accoun o a ound
40% o elec ici y p ices, i emains ques ionable whe he
a ho izon al indus ial policy o his kind will sus ainably
imp o e Ge many’s long- e m compe i i eness. One way
o assess his ques ion is by examining he a io o ene gy
cos s o g oss p oduc ion alue. This me ic se es as a
eliable indica o o how signi ican ly ene gy cos s in lu-
ence o al expenses.
Acco ding o he la es a ailable da a (2022) – which al-
eady includes ene gy p ice inc eases ollowing Russia’s
in asion o Uk aine – app oxima ely 87% o he g oss
p oduc ion alue o he manu ac u ing sec o comes
om indus ies whe e ene gy cos s accoun o 5% o
less o o al expenses (Figu e 2). Sec o s whe e ene gy
cos s exceed 10% ep esen only abou 9% o g oss
p oduc ion alue. In con as , labou cos s play a much
la ge ole, a e aging abou 21% o o al expenses and
exceeding 45% in some indus ies. On a e age, a 1% in-
c ease in wages leads o he same inc ease in cos s as
a 10% inc ease in ene gy p ices in many sec o s o he
manu ac u ing indus y. Ene gy cos s a e he e o e no
he main cos d i e o mos indus ies. As a esul , a
educ ion in elec ici y p ices would ha e a limi ed im-
pac on he o e all cos compe i i eness o he indus ial
sec o .
A ho izon al indus ial policy aimed a imp o ing he
amewo k condi ions o p oduc ion – o example, by
educing elec ici y cos s o cu ing ed ape – would like-
ly s eng hen Ge many as a business loca ion. Ye , his
alone will no be su icien o o e come he in es men
and inno a ion backlog and imp o e compe i i eness in
he long e m. Conc e e p oposals om he poli ical side
on how o suppo indus y in he cu en phase, pa icu-
la ly h ough e ical indus ial policy, a e a e.
Sys emic isks and ma ke ailu es: O e coming oad-
blocks o a sus ainable indus ial ans o ma ion
Mos o he key challenges o Ge man indus y a e no
na ional bu ha e Eu opean o e en global dimensions.
Fi s and o emos is clima e change, which ul ima ely
equi es he deca bonisa ion o indus ial p oduc ion.
In addi ion, geopoli ical changes equi e adjus men s o
p oduc ion s uc u es in o de o inc ease he esilience
o p oduc ion chains by main aining and di e si ying sup-
plie s.
Such a s uc u al change equi es majo inno a ion and
in es men e o s.3 The as majo i y o his will ha e o
be p o ided by companies. The p o i expec a ions o
3 A discussion on he elemen s o a clima e-neu al s uc u al ans o -
ma ion can be ound in Ba d e al. (2024).
ZBW – Leibniz In o ma ion Cen e o Economics 217
Fo um
Figu e 3
Ra io o equipmen in es men o g oss alue added
in Ge many
in %
Sou ce: Na ional accoun s, Fede al S a is ical O ice, 2025; au ho s’ own
calcula ions.
7
7.5
8
8.5
9
9.5
10
10.5
11
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Manu ac u ing indus y
To al economy
long- e m in es men s in old echnologies based on os-
sil uels a e inc easingly alling. By con as , he ea nings
po en ial o in es men s in clima e-neu al echnologies is
a guably high – bu so a e he sys emic isks due o he
some imes undamen ally new echnological de elop-
men pa hs.
Elec omobili y and hyd ogen echnology a e among he
key a eas o s uc u al change. In bo h echnological a -
eas, a company’s inno a i e and economic success de-
pends hea ily on o he companies also in es ing suc-
cess ully in new echnologies and alue chains. Wi hou
cha ging in as uc u es and ba e y ecycling, he e will
be no success ul elec ic ca s; wi hou e icien hyd ogen
p ocessing and sa e anspo ou es, he e will be no cli-
ma e-neu al s eel p oduc ion. E en la ge companies can-
no bea such sys emic isks on hei own. The esul is
inno a ion and in es men blockages, i.e. ma ke ailu e.
A simila phenomenon is occu ing in e o s o c ea e
mo e esilien indus ial alue chains (Ellio e al., 2022).
The need o g ea e esilience i s became appa en du -
ing he COVID-19 pandemic and i s a e ma h. The c isis
exposed ulne abili ies in global supply chains, as con-
aine ship conges ion in Asian po s and sho ages o
c i ical componen s such as semiconduc o s dis up ed
p oduc ion in Eu ope and he US. The once eliable global
di ision o labou – based on concen a ed p oduc ion
and low cos s – began o un a el. E en a e he pandem-
ic, sho ages o key in e media e goods pe sis ed due o
a a ie y o ac o s. Meanwhile, ising geopoli ical en-
sions be ween China, Taiwan and he US, as well as con-
lic s in Uk aine and he Middle Eas , con inue o highligh
he u gency o ensu ing mo e s able and esilien supply
chains. The inc easing unp edic abili y o global ade,
combined wi h widesp ead lean manu ac u ing p ac ices,
has c ea ed sys emic isks whe e e en mino dis up ions
can quickly escala e in o global economic shocks (Goldin
& Ma ia hasan, 2014).
On he one hand, companies compe ing in e na ionally
mus ac i ely mi iga e he isk o dis up ions o global
supply lows and he ailu e o key supplie s. Being cu o
om c i ical inpu s, e en empo a ily, is no an op ion – es-
pecially i compe i o s e ain access. While ce ain isks,
such as c edi de aul o mino echnical ailu es, can be
co e ed by insu ance, majo isks associa ed wi h supply
delays o dis up ions equi e s a egic ac ion. These in-
clude s ockpiling, insou cing, supplie di e si ica ion and
nea sho ing.
S ockpiling key in e media e goods helps o mi iga e
sho - e m supply dis up ions. Insou cing allows compa-
nies o egain con ol o e key pa s o hei alue chain by
ein eg a ing p e iously ou sou ced asks and unc ions.
Di e si ica ion educes dependence on indi idual suppli-
e s and ensu es ha al e na i e sou ces a e a ailable i
one ails – al hough his can limi economies o scale and
educe p o i ma gins. Nea sho ing and iendsho ing o -
e addi ional oppo uni ies o inc ease esilience by mo -
ing ope a ions om dis an , poli ically unce ain egions
o geog aphically close o poli ically aligned coun ies,
he eby educing exposu e o global ade ins abili y.
On he o he hand, hese isk mi iga ion measu es come a a
cos . The e iciencies gained h ough jus -in- ime manu ac-
u ing and economies o scale a high p oduc ion olumes
may be los . In he sho e m, companies ha do no ake
p ecau ions may gain a compe i i e ad an age by main ain-
ing lowe cos s. As a esul , many companies emain eluc-
an o adop necessa y isk p e en ion s a egies.
The impac o hese unce ain ies and dilemmas is e i-
den in declining in es men le els, as e lec ed in he in-
es men a io o he manu ac u ing sec o (Figu e 3). The
olume o equipmen in es men ela i e o g oss alue
added has emained weak o some ime and has ecen ly
allen well below he long- e m a e age o he pas wo
decades.
The cu en in es men backlog – esul ing om he ma -
ke ailu es desc ibed abo e – can be add essed wi h he
help o a coo dina ing en i y: he s a e (e.g. Michelsen,
2023; Wambach, 2023). By acili a ing ag eemen s, ab-
so bing pa o he cos s and educing sys emic isks, he
s a e can help accele a e he adop ion o g een echnolo-
gies. Addi ionally, i can assume pa o he insu ance bu -
den o enhance he esilience o indus ial supply chains,
he eby encou aging i ms o in es despi e p e ailing un-
ce ain ies.
In e economics 2025 | 4
218
Fo um
The exis ing concep s o how he s a e can espond wi h
e ical indus ial policy a y (Beli z e al., 2021). Unde he
In la ion Reduc ion Ac , he USA elies on ax incen i es
o encou age companies o inno a e and in es in g een
echnologies. A he same ime, subsidies a e linked o
ce ain p opo ions o domes ic p oduc ion in o de o e-
duce dependence on o eign supplie s. China is o cing
he co esponding echnology pushes h ough i s in lu-
ence on la ge s a e-owned companies o high indi idual
subsidies, as in he case o elec omobili y.
Howe e , he ins i u ional and legal equi emen s o bo h
s a egies a e no in place in Eu ope. The Eu opean Union
lacks s anda dised common inancial s uc u es o he
use o simple ax incen i es. Access igh s o indi idual
companies – e en i hey a e subjec o s a e pa icipa-
ion – a e s ic ly limi ed. Despi e he ecen announce-
men o a majo deb - inanced in es men p og amme o
his o ic p opo ions, Ge many alone lacks he inancial
and indus ial capaci y o d i e he b eak h ough o cli-
ma e-neu al p oduc ion echnologies.
The need o a s a egic, Eu opean and compe i ion-
o ien ed indus ial policy
To main ain i s capaci y o inno a ion and s uc u al ans-
o ma ion, Ge many mus pu sue a s a egic, Eu opean and
compe i ion-o ien ed indus ial policy (e.g. C iscuolo e al.,
2022; Piechucka e al., 2024; OECD, 2024).4 Such an indus-
ial policy should be p ima ily compe i ion-o ien ed: in-
s ead o p omo ing na ional champions, i should use com-
pe i i e mechanisms o dis ibu e unding e icien ly, e ec-
i ely and anspa en ly. Open ende s wi h objec i e e alu-
a ion c i e ia can help ensu e ha public unds a e di ec ed
owa ds p ojec s wi h high socie al alue wi hou dis o ing
compe i ion. Addi ional mechanisms, such as open-access
equi emen s o publicly unded in as uc u e (e.g. Duso e
al., 2025) o speci ic condi ions in public p ocu emen (e.g.
Chiappinelli e al., 2025), can also be u he de eloped.
I is impo an ha his indus ial policy is e icien and o -
wa d-looking, wi h a ocus on p omo ing inno a ion and
in es men a he han subsidising unning cos s. Ge ma-
ny’s and Eu ope’s compe i i eness depends c ucially on
a ge ed in es ing in new echnologies, while a he same
ime a oiding ma ke -dis o ing and ine icien subsidies.
This inc eases he incen i es o inno a ion and p omo es
sus ainable economic de elopmen .
A s a egic app oach is essen ial. No e e y hing should
ecei e unding – in es men s mus be di ec ed owa ds
4 Fo a comp ehensi e o e iew o he impac o a ious indus ial poli-
cy measu es, see also Juhász e al. (2023).
key a eas such as he digi al economy, he heal hca e
sec o and clean echnologies (Beli z & Go nig, 2023).
Fu he mo e, p io i y should be gi en o echnologies a
he beginning o many supply chains, such as semicon-
duc o s, ba e ies and hyd ogen p oduc ion, o enhance
economic esilience. Expanding public in as uc u e, in-
cluding elec ici y g ids, hyd ogen ne wo ks and gigabi
b oadband, is also c ucial as i c ea es long- e m com-
pe i i e ad an ages and s eng hens he economy’s inno-
a i e capaci y. Such in es men s bene i no only com-
pe i i eness bu also he b oade public in e es .
Ano he key pilla o his indus ial policy is a much s onge
Eu opean ocus. Challenges such as echnological so e -
eign y and secu ing s a egic alue chains canno be ack-
led by indi idual coun ies alone. Close coope a ion a he
EU le el is he e o e essen ial. The EU mus ac as a coo -
dina o o minimise isks, pool esou ces and p e en ag-
men ed indus ial policies. This will c ea e he ounda ion
o a esilien and inno a i e Eu opean economy capable
o acing global challenges. Only h ough collec i e ac ion
can Eu ope na iga e he e ol ing geopoli ical landscape.
An exempla y ins umen o a Eu opean-coo dina ed
indus ial policy is he Impo an P ojec s o Common
Eu opean In e es (IPCEI). This ins umen p omo es
p ojec s in se e al membe s a es ha a e aimed a he
indus ial u ilisa ion o new echnologies. In con as o
adi ional echnology policy, unding can ex end di ec ly
o comme cial u ilisa ion in he con ex o mass p oduc-
ion o enable he de elopmen o p oduc ion capaci ies
ac oss he en i e alue chain. To his end, he Eu opean
s a e aid ules o hese p ojec s ha e been elaxed. The
speci ic ype o unding (loans, gua an ees, g an s) and
he unde lying condi ions (eligible expendi u e, unding
a e, unding pe iod) a e de e mined o each IPCEI by
he membe s a e conce ned (Eu opean Commission,
2025). P ojec s o da e ha e ocussed on mic oelec on-
ics, ba e y cell p oduc ion and hyd ogen echnologies,
among o he hings. Howe e , in o de o he IPCEIs o
ealise hei ull po en ial, hey need o be b oadened, sig-
ni ican ly s eng hened inancially, and implemen ed mo e
e icien ly and anspa en ly.
How o inance indus ial policy
A key ou s anding ques ion is how o inance his indus-
ial policy. Se e al le els can be en isaged. Fi s , he new
Ge man go e nmen le e aged i s majo i y in he p e ious
pa liamen o secu e a €500 billion special und o add ess
c i ical in as uc u e needs. In es ing in oads, b idges,
schools and ail ne wo ks is a o m o ho izon al indus ial
policy – an essen ial and long o e due s ep gi en Ge -
many’s well-documen ed in as uc u e unde in es men
ZBW – Leibniz In o ma ion Cen e o Economics 219
Fo um
(Go nig e al., 2015; F a zsche e al., 2015). Howe e ,
when i comes o ne wo k expansion – such as elec ic-
i y g ids, hyd ogen in as uc u e and b oadband – public
in es men mus be ca e ully designed o a oid c owding
ou p i a e capi al o c ea ing unin ended wind all gains.
Equally impo an , he und can also be used o s eng h-
en and imp o e public adminis a ion o ensu e ha unds
a e used e icien ly and wi hou delay. Achie ing his e-
qui es wo key e o ms: accele a ing he digi isa ion o
public adminis a ion o s eamline egula o y p ocesses
and emo e ou da ed ba ie s; and s eng hening admin-
is a i e s uc u es ha ha e been signi ican ly weakened
in ecen decades, especially a he municipal le el.5
Second, while in as uc u e in es men – a key elemen
o ho izon al indus ial policy – can be inanced h ough
he newly es ablished special und, addi ional e ical in-
dus ial policy measu es will s ill be necessa y. Wi hin his
amewo k, he e is oom o deb - inanced in es men ,
pa icula ly in conjunc ion wi h he Clima e and T ans-
o ma ion Fund. Howe e , new bo owing is no he only
op ion. Exis ing p og ammes and subsidies should i s
unde go a sys ema ic e iew o iden i y ine iciencies and
po en ial sa ings. Redi ec ing hese eed-up esou ces
owa ds mo e a ge ed and s a egic e ical indus ial
policies would signi ican ly enhance hei e ec i eness.
Addi ionally, a e ol ing und could be es ablished o
p e- inance key indus ial p ojec s, ensu ing sus ainable
long- e m inancing wi hou excessi e iscal bu den. This
app oach would ensu e ha public unds a e no simply
spen , bu a e pa ly eplenished by e u ns om success-
ul p ojec s, making u u e in es men s mo e sel -sus ain-
ing. The success o Ge man indus ial policy also depends
on coo dina ed e o s ac oss Eu ope. To his end, a Eu o-
pean Inno a ion and Indus ial De elopmen Fund could
be se up a he EU le el, inanced by common bo ow-
ing. Such a und would allow a ge ed suppo o s a egic
Eu opean echnologies bu would equi e e o ms o EU
iscal ules and g ea e accep ance o common inancial
ins umen s.
Thi d, beyond adi ional ho izon al and e ical indus ial
policies, de ence spending o e s an addi ional way o
s imula e inno a ion and in es men in Ge many’s manu-
ac u ing sec o . Russia’s wa agains Uk aine, g owing
geopoli ical unce ain ies and he US’s u n owa ds iso-
la ionism ha e unde lined he u gen need o Eu ope o
5 The la es o icial commission on Ge many’s in es men gap has
al eady unde lined he u gency o hese e o ms. One o i s p opos-
als is he c ea ion o a ede al agency ha municipali ies can use o
cons uc ion p ojec s. This would elimina e he need o each munici-
pali y o de elop adminis a i e capaci ies ha a e only needed oc-
casionally o la ge-scale p ojec s (Bundesminis e ium ü Wi scha
und Ene gie, 2016).
s eng hen i s de ence capabili ies. In addi ion o he c ea-
ion o he special in as uc u e und, Ge many has aken
an impo an s ep by exemp ing de ence spending abo e
1% o GDP om i s deb b ake. This majo ea mamen is a
s a egic oppo uni y o d i e echnological inno a ion and
s eng hen Ge many’s indus ial base. While a signi ican
po ion o he addi ional unds will be spen on con en ion-
al mili a y equipmen such as anks and ammuni ion, which
is likely o boos in es men a se e al le els o he supply
chain, a o wa d-looking s a egy will also p io i ise eme g-
ing de ence echnologies. A i icial in elligence-d i en
weapon sys ems, d ones, c yp og aphic secu i y solu ions
and o he ad anced echnologies should be sys ema ically
in eg a ed in o p ocu emen s a egies. These in es men s
can ac as a ca alys o b oade echnological p og ess,
os e ing inno a ion in bo h de ence and ci ilian indus ies
while gene a ing spillo e e ec s ha enhance indus ial
compe i i eness. The dual-use po en ial o hese echnolo-
gies hus c ea es new unding oppo uni ies o comple-
men o he indus ial policy ins umen s.
To maximise he impac o hese in es men s, s ong
Eu opean coo dina ion is essen ial. A common p ocu e-
men amewo k backed by uni ied inancing mechanisms
and aligned s a egic p io i ies would no only bols e Eu-
ope’s collec i e de ence bu also s eng hen i s de ence
indus y and he b oade manu ac u ing sec o . Howe e ,
implemen ing such a amewo k would equi e signi ican
ins i u ional and go e nance e o ms, as i would en ail a
educ ion o na ional con ol o e he deploymen and use
o mili a y asse s by o he membe s a es. This is pa icu-
la ly sensi i e o Ge many, which has his o ically insis ed
on ha ing a decisi e say in he disposi ion and u ilisa ion
o join ly p oduced mili a y equipmen .
Conclusion
The Ge man manu ac u ing indus y is cu en ly acing
p o ound and complex challenges. High p oduc ion cos s,
g owing geopoli ical unce ain ies and he u gen need o
ansi ion owa ds clima e-neu al echnologies a e plac-
ing signi ican p essu e on Ge many as a business loca-
ion and indus ial base. Measu es ha ha e been dis-
cussed so a – such as ax elie o educ ions in elec-
ici y cos s – all sho , as hey ail o add ess he deepe
s uc u al p oblems. Wha is needed ins ead is a mul i ac-
e ed app oach ha in eg a es bo h ho izon al and e ical
indus ial policy measu es. While he newly es ablished
€500 billion special und is a c ucial i s s ep in add ess-
ing in as uc u e needs and, possibly, public adminis a-
ion mode nisa ion, a compe i ion-o ien ed and s a egic
indus ial policy ha no only p omo es inno a ion in a a -
ge ed way bu also a oids ma ke dis o ions and ac i ely
suppo s long- e m s uc u al ans o ma ion will be key.
In e economics 2025 | 4
220
Fo um
An essen ial componen o his app oach is close Eu o-
pean coope a ion o p e en agmen a ion and o build
a
esilien , inno a ion-d i en economy. Pa icula ly im-
po an is a unding s a egy ha os e s compe i ion and
ocuses on key enabling echnologies. Ini ia i es such as
he IPCEI al eady p o ide a sui able amewo k, bu hey
mus be made mo e e icien and anspa en . Mo eo e ,
s a egic ea mamen o e s a unique oppo uni y o s imu-
la e inno a ion and o i y he manu ac u ing sec o . Only
wi h a clea , o wa d-looking indus ial policy can Ge many
sa egua d he long- e m compe i i eness o i s manu ac-
u ing indus y.
Re e ences
Be nha d , L., Duso, T., Sogalla, R., & Schie sch, A. (2023). B oad elec-
ici y p ice subsidies o indus y a e no a sui able elie ins umen .
DIW Weekly Repo , 13(38/39), 257–265.
B and , A., Falck, O., Go nig, M., G imm, V., Heymann, E., Kem e , C.,
K äme , H., P a l, C., on Rüden, C., Schmid , C. M., & Schmid , T.
(2022). D oh de deu schen Wi scha eine Deindus ialisie ung?
Wi scha sdiens , 102(12), 917.
Ba d , H., Go nig, M., Holzmann, S., Kem e , C., Pe e son, S., Sem au,
F. O., & Wol , A. (2024). Wie kann die g üne T ans o ma ion gelingen?
Wi scha sdiens , 104(5), 295.
Beli z, H., Go nig, M., Kem e , C., Löckene , R., & Sundmache , T. (2021).
Se ing p io i ies, pooling esou ces and accele a ing ans o ma ion.
New app oaches in indus ial and echnology policy. WISO Disku s, 14.
Beli z, H., & Go nig, M. (2023, 16 No embe ). Ohne s a egische Indus-
iepoli ik geh es nich . Mak onom.
Bundesminis e ium ü Wi scha und Ene gie. (2016, Decembe 12).
S ellungnahme de Expe enkommission „S ä kung on In es i ionen in
Deu schland“.
Chiappinelli, O., Giu ida, L. M., & Spagnolo, G. (2025). Public p ocu e-
men as an inno a ion policy: Whe e do we s and? In e na ional Jou -
nal o Indus ial O ganiza ion, 103157.
C iscuolo, C., Gonne, N., Ki azawa, K., & Lalanne, G. (2022). An indus ial
policy amewo k o OECD coun ies: Old deba es, new pe spec-
i es. OECD Policy Pape s, N . 127.
Des a is. (2025). S a is ical Repo, Oc obe 2024, Table 61241-16.
Duso, T., Na do o, M., & Seldeslach s, J. (2025). A e ospec i e s udy
o s a e aid con ol in he Ge man B oadband ma ke . Jo unal o he
Eu opean Economic Associa ion, o hcoming (Discussion Pape ).
Ellio , M., Golub B., & Leduc, M. V. (2022). Supply Ne wo k Fo ma ion
and F agili y. Ame ican Economic Re iew, 112(8), 2701–2747.
Eu opean Commission. (2025). P ac ical in o ma ion o Impo an P o-
jec s o Common Eu opean In e es (IPCEI).
F a zsche , M., F eie , R., & Go nig, M. (2015). O e coming weaknesses in
municipal in es men . DIW Economic Bulle in, 42/43, 557–559.
Go nig, M., Michelsen, C., & an Deu e den, K. (2015). Local Public In-
as uc u e Showing Signs o Wea and Tea . DIW Economic Bulle in,
42/43, 561–567.
Goldin, I., & Ma ia hasan, M. (2014). The Bu e ly De ec : How Globaliza-
ion C ea es Sys emic Risks, and Wha o Do abou I . P ince on Uni-
e si y P ess.
Juhász, R., Lane, N., & Rod ik, D. (2023). The new economics o indus ial
policy. Annual Re iew o Economics, 16, 213–242.
Michelsen, C. (2023, 18 Oc obe ). Die eigenen S ä ken in den Vo de g -
und s ellen. Mak onom.
OECD. (2024). P o-compe i i e Indus ial Policy – Backg ound No e. DAF/
COMP, 3.
Piechucka, J., Sau i-Rome o, L., & Smulde s B. (2024). Compe i ion and
Indus ial Policies: Complemen a y Ac ion o EU Compe i i eness.
Jou nal o Compe i ion Law & Economics, 20(4), 384–408.
Wambach, A. (2023, 11 Oc obe ). Beglei ende Ins i u ionen ü die Indus-
iepoli ik. Mak onom.
