Green industrial policy
Managing transformation under uncertainty
This Discussion Paper presents a normative concept of green industrial policy, which is defined as encompassing any policy measure aimed at aligning the structure of a country’s economy with the needs of sustainable development within established planetary boundaries. The paper elaborates on the rationale of a green industrial policy, how it differs from conventional industrial policy, why it is faced with significantly bigger challenges, and how these can be met.
Production and consumption patterns today are largely shaped by markets. However, markets fail to solve many of the environmental challenges the world is facing. Therefore, governments have to intervene, thus reclaiming the primacy of public policy in setting and implementing societal objectives. While safeguarding the sustainability of human life on our planet makes green industrial policy a highly normative undertaking, there is also a strong economic case for green industrial policy – the success stories of such ‘green’ frontrunners as Germany and Denmark demonstrate the competitiveness potential of the new technologies.
German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)