Europe's industrial policy revival sparks debate on economic transformation

Industrial policy has regained attention across Europe in recent years. Once dismissed as outdated or risky, it is now seen as a potential tool for economic growth. A new podcast, 45 Graus, explores these ideas with experts like Ricardo Paes Mamede, a leading voice on the topic in Portugal. For decades, industrial policy faced criticism. Many linked it to protectionism or inefficient state intervention. Some African nations struggled with poorly executed strategies, reinforcing doubts. Yet in Asia, countries like South Korea and Hong Kong used targeted policies to drive development. China, too, has blended state guidance with strong domestic competition to build its industries.

The European Union has taken notice. In 2024, the EU Commission introduced the Industrial Accelerator Act, inspired by recommendations from former Italian Prime Minister Mario Draghi. The goal is ambitious: raise manufacturing's share of EU GDP from 14.3% to 20% by 2035. However, as of March 2026, details on how individual countries like Portugal will implement these plans remain unclear. In Portugal, tourism dominates the economy, raising questions about missed opportunities. Mamede, a professor of political economy at ISCTE, argues that a stronger state role could help shift focus toward higher-value industries. His views feature in *45 Graus*, a biweekly podcast released every other Wednesday. The show dives into complex economic debates with specialists, offering deeper insights into structural transformation.

The revival of industrial policy suggests a shift in economic thinking. While past failures caution against over-optimism, successful cases in Asia show its potential. Portugal's reliance on tourism highlights the stakes—whether new policies can reshape its economic future remains to be seen. The conversation, at least, is gaining momentum.