September 8, 2015
In a new working paper, “Renewable Futures and Industrial Legacies: Wind and Solar Sectors in China, Germany, and the US,” postdoctoral fellow Jonas Nahm offers a new explanation for patterns of industrial specialization in highly globalized industries.
Despite the fact that governments from country to country use similar policies to foster solar and wind industries, Nahm says, companies innovate in distinctly different ways – and not, as has been posited, as a result of state intervention or institutional difference. “Firms no longer have to establish the full range of skills required to bring an idea from the laboratory to market,” he writes, “but can insert themselves in networks of innovators with highly specialized skills.”
In this environment, firms respond to industrial policy by building on local industrial legacies, even in emerging industries such as wind and solar. As governments support renewable energy industries not just for environmental reasons, but also in the hopes of creating tangible economic rewards, this paper points to the limits of industrial policy and explains who benefits and how.