Developmental industrial policies for convergence within the European Monetary Union

The Eurozone faces two great challenges: a structural core-periphery divide, which resulted in the deepest economic crisis since the war, and several significant societal problems. To restore sustainable growth, EU policies must address both: tackle the fragility of the periphery’s industrial base, reducing the divergences in industrial capabilities, and create a new agenda for innovation and growth. The following sections argue that this calls for a policy combining support for demand with industrial policies tailored to the specific needs of economies at different levels of development. This requires a multilevel governance model acting at the European, national and regional levels.