Learning From the Past? EU Industrial Policy Challenges

ABSTRACT The European Union's current pursuit of strategic autonomy and technological sovereignty through industrial policy initiatives occurs amid intensifying US‐China competition, prompting new policy instruments and rhetoric that many scholars interpret as fundamental transformation in EU economic governance. However, historical analysis reveals striking parallels with the 1970s–1980s, when Europe confronted US technological dominance and Japanese competition. Drawing on historical institutionalist theory, extensive archival research, and seven interviews with key policymakers from the European Commission, this paper demonstrates how four interconnected structural constraints have maintained the EU's decentralized industrial policy governance across both periods. These constraints create what we term the “Competence Paradox”: external competitive pressures simultaneously create functional demands for centralized coordination while activating national sovereignty protection mechanisms that prevent such centralization. This analysis challenges interpretations of strategic autonomy as institutional transformation, revealing instead how external pressures generate innovation through institutional layering rather than governance transformation.