Balancing economic efficiency and national security: Industrial policy at the nexus of geopolitics and globalisation

This article examines the resurgence of industrial policy in the EU, with a particular focus on its evolving rationale in the context of geopolitical fragmentation and economic security concerns. It explores how recent global events, including the Covid-19 pandemic and Russia’s invasion of Ukraine, have intensified debates about government intervention in the economy and led to a renewed focus on strategic autonomy. The paper analyses the key EU industrial policy initiatives and their implications, particularly in sectors such as energy, defence and critical technologies. Special attention is given to the challenges and opportunities presented by Ukraine’s reconstruction, including potential adaptations to EU state aid rules. The article concludes by proposing principles for effective industrial policy design and implementation, emphasising the importance of maintaining single-market integrity, ensuring transparency and accountability, and balancing interventions with sound macroeconomic policies.