To get the economy back on its feet, taboo subsidies might be the solution, the Hertie School President writes.
The climate crisis and global competition over economic systems have put a strain on Germany’s economy. In an op-ed jointly published by Handelsblatt and Tagesspiegel on 5 October, Hertie School President Cornelia Woll calls for a new German and European framework for industrial policy.
“Companies will only invest in green technology if the market has the right incentive structures. It is not enough to make carbon emissions more expensive so that brown industries are less profitable,” the Professor of International Political Economy writes. An incentivising industrial policy should include both pricing pollution and the cost of knowledge transfer to enable green innovation.
Compared to the United States or China, Germany and Europe are currently lagging behind. According to Woll, Germany needs to set thematic priorities, and there should be more European funds to guarantee research and innovation. Moreover, she notes that the European Central Bank and the European Investment Bank could make greener decisions regarding their credit and bank supervision policies for private investment.
Read the full article in Handelsblatt or Tagesspiegel (in German).
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Cornelia Woll, President and Professor of International Political Economy