"The industrial transformation towards a more sustainable, technological and knowledge-intensive economy can bring prosperity to the EU, but also bears the risk of increasing disparities among the EU territories. On the one hand, some regions are more fit to benefit from these changes. On the other, economic activity, especially one that is knowledge- and innovation-intensive, tends to spatially cluster in areas that are already more advanced. Productivity, innovation, skills and thriving firms will increasingly concentrate in a few wealthy areas, while the less prosperous are excluded from the gains.

The current debate on an EU industrial policy overlooks this issue of inequality and instead focuses on competitiveness vis-à-vis global competitors, key technologies and achieving sustainability commitments. While this is important, the focus on the technological frontier, international trade and knowledge-intensive production could create unintended negative consequences due to the lack of an explicit goal for even development and inclusive industrial transition.

In this Policy Brief, Policy Analyst Marta Pilati argues that the EU industrial strategy should be centred on the issue of inequality. This can be achieved by challenging misconceived assumptions, critically evaluating past and future policies, and designing measures that target all EU regions and successfully bring them along the transformation."

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