Introduction
Debates around industrial policy and direct state intervention in companies’ productive decisions are frequent but have attracted growing interest of late. Discussions regarding the objectives and best instruments for “coordinating” or “orienting” the productive apparatus tend to receive increase attention during and after crises, which is why industrial policy has returned to the heart of the economic and political debate in the wake of the economic and financial crisis of 2008 and ensuing succession of crises, marked by the pandemic and Russia’s invasion of Ukraine.

Industrial policy in the EU prior to the IRA
The most modern approaches to industrial policy acknowledge that national economies do not function in isolation, which is why it is necessary to understand how countries depend on each other (IMF, 2022; Rodrik, 2022). First, we introduce a set of dependencies, or interdependencies, that require concerted strategic action and can be viewed as the basis for approaching, designing, executing, and evaluating industrial policy in the EU. According to a recent and exhaustive study by the ECB (ECB, 2023) these key dependencies are as follows:

• Trade dependencies. External trade dependencies can be measured using different metrics, notable among which: the share of an economy’s value-added that comes from imported value-added; the scarcity of a certain product; and country-level import or export concentration. It should be noted that trade dependency ultimately reflects the level of participation in global production chains and is, therefore, an ambiguous phenomenon that can be viewed as both an opportunity and a threat. Considering the level of imported value-added relative to total value-added and considering the three main trading blocs (EU, US, and China), in the primary food sector, the EU and US present dependencies of close to 20%, whereas China’s dependence is less than 10%. In manufacturing, the differences between the blocs are smaller, with all three moving within a range of between 15% and 20%. In services, dependencies are lower in the EU (10%) and the US (5%), while the Chinese economy is more dependent (11%).
• Energy dependencies. The EU imports around 55% of the energy it consumes, and that dependency is very uneven from one economy and sector to the next. The countries with more developed renewable energy infrastructure (such as Denmark, Finland, and Sweden), more nuclear power capacity (Bulgaria, France, Slovakia, and Sweden) or relatively high production of fossil fuels (Czech Republic, Poland, and Romania) are less energy dependent.
• Critical raw materials dependencies. The EU classifies 30 raw materials as “critical” based on an evaluation across two dimensions: their economic relevance and their supply risk. According to the most recent data available, in 2019, the EU imported 15 billion dollars’ worth of critical raw materials from the rest of the world. Moreover, the imports of some of these critical raw materials are highly concentrated among a very small number of trading partners and some of the raw materials are virtually impossible to substitute.
• Digital transition. According to the European Commission’s International Digital Economy and Society Index (I-DESI), the EU ranks 12^th when it comes to overall digital performance. The difficulties impeding swifter adoption of digital technologies in the EU are related with structural weaknesses in terms of digital infrastructure, skills of the population and regulation. It is foreseeable that, given the rising volume of data processed in different digital tools and solutions (cloud computing, AI, 3D printing), and the increasing needs in processing power, the EU’s dependencies in this sector could become even more important if measures are not taken to revert the lag.
• Financial interdependencies. According to the ECB (2023), there are four channels of financial dependency of relevance to the EU: (1) cross-border investments, with the eurozone characterised by a high degree of financial openness and with advanced economies as its main FDI partners; (2) limits to investment finance in the EU, as the European banking sector remains partly segmented along national lines and lacks deeper and broader capital markets; (3) payments and financial market infrastructures, the concern here being the dominant position of non-EU payment-related service providers; and, lastly, (4) the role of currencies, as the international use of an issuer’s currency can lead to broader, cheaper and more easily accessible funding for the domestic economy and the euro has an undersized role relative to trade patterns and international investments involving the EU.
• Labour market and migration interdependencies. In the last 20 years, the number of immigrants from outside the EU and of EU citizens living in other EU countries has increased by 60%. On aggregate, migrant workers help to ensure a better match between supply and demand in the various segments of the labour market and are therefore a pillar of progress. According to the ECB (2023), there are several outstanding challenges: (i) intra-EU mobility remains lower than in the US, limiting potential growth; (ii) the EU could stand to make itself more attractive to more skilled immigrants; and, (iii) the prevailing level of geopolitical uncertainty is likely to have a major impact on migration flows.

Industrial policy in the EU since the IRA
In 2022, the US passed the Inflation Reduction Act (IRA), a legislative package made up of three sets of measures: tax reform, healthcare reform and new energy and climate legislation. The climate-related part of the package includes up to 400 billion dollars of spending over 10 years, articulated around the following measures (Kleimann et al., 2023):

• Subsidies for electric vehicle purchases (for individuals and companies buying them);
• Production and investment subsidies for manufacturers of clean-tech products, including batteries and components used in renewable electricity generation; and,
• Subsidies for producers of carbon-neutral electricity, as well as hydrogen and other clean fuels.

Recent debate around industrial policy in Spain
These debates are also relevant for Spain. Traditionally, the main objectives of industrial policy in Spain have been articulated around the following priorities: increasing the weight of the manufacturing sector in GDP; diversifying and specialising the productive apparatus; increasing the economy’s R&D intensity; halting premature deindustrialisation in certain regions; fostering business’ international expansion; boosting labour productivity and tightening cooperation between the public and private sectors (Myro, 2016, 2017, 2021; Xifré, 2014, 2017; Arrilucea et al., 2020).

1. Structural, circumstantial or regional weaknesses of the Spanish economy that impede absorption of investments related with technological innovation and the knowledge economy. These weaknesses can take the form of insufficient market size, a shortage of private funds available at the regional level to complement public investment, when both are necessary, and low private R&D intensity.
   
   
2. Obstacles derived from regulation and a lack of administrative agility. For example, we are seeing difficulties in getting all of the initiatives contemplated in the PERTEs completed within the stipulated deadline (end of 2026) for a mix reasons. It is also noteworthy the traditional bias in Spain in favour of ex ante controls to the detriment of ex post controls, and a weak culture of assessing the impact of public policies (despite recent progress in this area).
   
   
3. Rigidity in the tenders’ design and specific requirements. For example, in addition to the tight project execution timeframes, it is proving hard to form the groups of SMEs required for participating in the lever projects that encompass two or more regions and for SMEs in general to come up with the guarantees required. Here it is also worth mentioning the requirement that the investments translate into a net reduction in emissions and do not harm the environment significantly (DNSH certification), which can cause problems on account of its ambiguity.
   
   
4. There is also room for increasing the level of involvement in decision-making by different key agents such as business associations or the regional and local authorities. The goal should be for these economic transformation projects to be underpinned by maximum levels of institutional, social, and economic consensus from the initial stage.

Conclusions
This paper provides an overview of the main current debates around the conception, design, and implementation of industrial policy in the EU and Spain. Firstly, it itemises the six fundamental external dependencies of the EU and its member states. These (inter)dependencies provide the basic context for the development of any industrial policy measures. They were set down prior to passage of the Inflation Reduction Act (IRA) in the US in 2022, which includes certain protectionist measures. We then examine the IRA and the main responses being considered by the EU, highlighting three messages: (1) there is virtual full consensus that protectionist countermeasures should be avoided; (2) the IRA could emerge as an opportunity for European companies focused on the transition to sustainability; and, (3) the EU still has room to negotiate limits on the most harmful and protectionist aspects of the IRA. The paper concludes with a review of some of the main obstacles encountered in implementing the PERTEs under the umbrella of the NGEU funds. These obstacles are relevant as they offer important lessons learned.