Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: In recent years and not least after the latest financial and economic crisis, we have seen a strongly renewed interest for industrial policy to get the developed economies growing again. The political entrepreneurs, i.e. the politicians and their experts and advisers have been hunting desperately for new approaches to industrial policy. With political entrepreneurs, we here understand politicians/bureaucrats/civil servants/authorities within publically financed activities that with different methods try to stimulate entrepreneurship and self-employment with the overall goal to increase employment and economic growth. The renewed interest for industrial policy and the increased importance of political entrepreneurs motivate that we once again ask the fundamental question about what shall be the proper focus, measures and extent of industrial policy. Shall the industrial policy be vertical and focus at specific industries and even specific companies or shall it be horizontal and focus at improving the general conditions for all industries and firms? However, there is a related and partly more controversial question, namely, what is the proper spatial scale for the policy interventions by the political entrepreneurs? Shall the industrial policy focus at certain places and possibly focus at existing and/or emerging industrial clusters or shall it be spatially neutral and not try to discriminate between different regions and places? The purpose of this paper is to throw some light over all above questions but with some extra focus at the questions concerning the spatial aspects. The above questions are by no means new but there are today very good reasons to throw new light at them not least against the back¬ground of EU´s new industrial and regional policy that aims at achieving ‘smart specialization’, what that now may be.

Keywords: Political entrepreneurship; industrial policy; clusters; smart specialization; regional growth

JEL-codes: L38; L52; L53; R11; R58

16 pages, June 1, 2015

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