SIP Talks
The Costs of Conditionality
IPCEIs and the Constrained Politics of EU Industrial Policy
In the wake of the global return of industrial policy, many have examined why states increasingly resort to market activism. But much less is known about how industrial policy actually works ‘on the ground’.
In this talk, based on a paper co-authored with Luuk Schmitz and Tobias Wuttke, I address this how-question through an in-depth case study on the poster child of the EU’s new industrial policy: the Important Projects of Common European Interest (IPCEI).
I argue that while the literature has rightly pointed out that attaching conditionalities to public money is key to steering markets effectively and equitably, conditionalities also come with costs. Moreover, they are not the reflection of policy design principles but reflect political, institutional, and ideational constraints that shape which and how conditionalities are applied. IPCEI funding is conditional on meeting demanding eligibility and compatibility criteria, which, however, leads to what we call perverse outcomes, adverse selection, and workarounds. We make concrete policy suggestions as to how to mitigate these cost-conditionality trade-offs.
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Timo Seidl
Timo Seidl is a post-doc at the University of Vienna’s Centre for European Integration Research. He holds a PhD from the European University Institute with a thesis on the comparative political economy of digital capitalism. In his research, Timo looks at how ideas and institutions as well as politics and power shape the digital transformation of economies and societies, with a particular focus on the role of the European Union.