Industry and Innovation

The Tension Between Greener and More Competitive Industries: Industrial Policy, Global Value Chains and Firm Strategies

Background and Objective

The environmentally damaging impact of human economic activity has put us on a trajectory where we are already exceeding key planetary boundaries (Richardson et al., 2023). Climate change is the most urgent environmental challenge facing humanity, but other significant and potentially irreversible disruptions - such as biodiversity loss, chemical pollution and land degradation - are also on the horizon (Steffen et al., 2015).

In this context, two main processes can be observed across the manufacturing sector. First, the greening of existing industrial systems. Second, the expansion of new green industries and the restructuring of existing ones due to potentially disruptive new technologies. In the latter case, which is the main focus of this special issue, China’s emergence as a global leader in green industries and technologies has significantly reshaped the international industrial landscape (Lachapelle et al., 2017; Lee, 2022). China now dominates key sectors such as electric vehicles (EVs), lithium-ion batteries, solar photovoltaics (PV), and wind turbines, holding substantial shares in global manufacturing capacities (Altenburg et al., 2022; Huang et al., 2016, Lema & Lema, 2012). For instance, it controls over 80% of global solar PV manufacturing and more than 70% of lithium-ion battery production, positioning itself as a pivotal player in the clean energy transition (IEA, 2023).

This rapid advancement exerts considerable pressure on industrialized nations to balance the promotion of green policies with the preservation of their leadership in traditional industries (Altenburg & Rodrik, 2017). In this regard, the biggest challenge lies in fostering sustainable innovation and greening existing industries without compromising economic competitiveness and employment. Such tension permeates industrial policies, firm strategies and consumers acceptance, and is contributing to a restructuring of global value chains, strongly recasting the balance of power between different players, in both the Global North and the Global South (Alami et al., 2024, Mazzucato, 2016; Monaco & Schroeder, 2025).

From the European Union’s Green Deal Industrial Plan and the United States’ Inflation Reduction Act (IRA) to Japan’s Green Growth Strategy and the Korean New Deal, industrial policies aimed at accelerating the energy transition have been proliferating in wealthy, technologically advanced economies. Many developing economies are also designing and deploying state-led projects to foster green industrialization, as competition intensifies for EVs, so-called transition minerals, and clean energy.

However, the recent re-election of Donald Trump in the United States, the growth of right-wing parties in Europe following recent general elections in Germany, Italy and France have reignited debates over climate policies. President Trump’s warnings about eliminating the public policies on green industries implemented by the Biden administration and his withdrawn from the Paris Agreement reflect a dynamic that could turn into the preservation of traditional industries often masked or justified by climate change skepticism and a perceived lack of competitiveness compared to China. This highlights the real issues of industrial competitiveness and how it can overshadow the urgency of addressing the climate emergency (Copley, 2023). Overall, this emphasizes the need to resolve this tension to ensure that climate objectives remain a priority on the global policy agenda.

At the same time, given the threat of deindustrialization in many countries—both in the Global North and Global South—it is imperative to sustain industrial production (Tregenna, 2015). This underscores the challenges of navigating the global energy transition while preserving industrial relevance. In the Global South, such dynamics present a different set of challenges and opportunities. Historically contributing less to greenhouse gas emissions, these countries face less external pressure to transition their industries. However, the global shift towards green technologies presents a pivotal decision: whether to adhere to traditional industries and favor the interests of incumbents —risking technological lag— or to seize emerging opportunities for better integration into the evolving global market (Kastelli et al., 2023; Pegels & Altenburg, 2020; Mazzucato and Monaco, 2024).

Research Topics

This special issue of Industry and Innovation seeks theoretical and empirical contributions on the following topics. Contributions on related themes, exploring innovative approaches to addressing the tensions between Greener and More Competitive Industries, are also welcome.

1) Industrial Policy and Regulation

Governments are facing a dual challenge: they must advance structural change toward higher-productivity activities while simultaneously decoupling human well-being and economic progress from resource consumption and emissions. This situation underscores the need to better integrate industrial and environmental policies, rethinking the former from an environmental perspective and exploring how the latter can contribute to greater competitiveness, as well as to more and better jobs (Alami et al., 2024; Altenburg & Rodrik, 2017; Hauge, 2023).

In this new context, the special issue seeks to explore the following questions:

• What are the trade-offs and potential connections between industrial policies promoting green technologies and those supporting traditional industries?
• How do governments and state institutions mediate between environmental goals and industrial interests, and what challenges do they face in balancing these priorities?
• What geopolitical motivations drive the development of green industries and technologies, and how do they shape global competition and cooperation?
• How can industrial policy facilitate green leapfrogging and integration into new value chains, and what opportunities and challenges does this present for the Global South?

2) Global Value Chains and Networks

Concerns about sustainability within global value chains (GVCs) have grown significantly in recent years, leading to an expanding body of literature focused on greening GVCs (De Marchi et al., 2013; Gentile et al., 2023; Ponte, 2020). Additionally, the rise of green industries has transformed the global production landscape, sparking a renewed competition among industrialized nations and their multinational corporations (MNCs) to dominate key functions of these emerging value chains, such as research and development (R&D).

On the other hand, particularly in the Global South, such changes have renewed the importance of various critical raw materials located downstream in these new global value chains raising (1) pressing questions for these countries about how to leverage their resource endowments, while advanced nations engage in geopolitical battles to control critical materials.); (2) alarm in relation to new forms of predatory extractivism and new types of uneven exchange. In light of these developments, the special issue focuses on the following aspects:

• How do green industries and technologies reshape global production networks, including reshoring/offshoring, innovation, and competitiveness? 
• How is governance and power structured in green value chains, and what are the implications for the geography of global production and technology leadership?
• What are the impacts of international trade policies on the transition to green manufacturing?
• How can resource-rich countries in the Global South leverage green value chains to develop new capabilities and opportunities?

3) Firms Innovation Strategies and Labour 

The rise of Chinese national champions in green industries has put significant pressure on Western incumbents. These companies now find themselves in the unusual position of being left behind in new technological domains within sectors they have historically dominated (Bohnsack et al., 2014; Hockerts & Wüstenhagen, 2010). In this context, some European and U.S. companies have begun announcing major redundancies, attributing their declining competitiveness to regulations supporting industrial greening. For example, their lobbying efforts to reconsider EU Green Deal targets have successfully slowed progress toward net-zero objectives, making them less stringent. The concept of a Just Transition (Clarke & Lipsig-Mummé, 2020), largely developed within the trade union movement, aims to balance corporate concerns over competitiveness and productivity with social and environmental sustainability. However, tensions persist. In light of these developments, the special issue aims to explore some of the following questions:

• How are multinational corporations adapting their innovation strategies to the pressures of the green transition, and how is this affecting global competition?
• How do firms influence green policies and regulations, and what are the potential trade-offs between green technologies and competitiveness?
• How can environmental and employment sustainability be reconciled with competitiveness, and what are the labor implications of the green transition?
• How are green industrial plans affecting industrial relations and trade unions, and how can workers effectively participate in a just transition?

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