Coordinating Industrial Policy and Competition Regulation for Structural Transformation in Strategic Sectors under Technological, Environmental, and Geopolitical Change

This paper examines the changing relationship between industrial policy, competition regulation, and the transformation of strategic sectors in an environment characterized by technological change, decarbonization, digitalization, and growing geopolitical uncertainty. The literature shows that contemporary industrial policy increasingly extends beyond traditional protection and sectoral subsidies toward capability building, innovation support, coordination, green transition, and resilience. At the same time, competition regulation has become more complex because concentration, digital platforms, state ownership, network industries, and technology-intensive mergers generate new forms of market power that cannot be assessed through conventional market-share indicators alone. These developments are particularly visible in electricity, advanced manufacturing, digital ecosystems, and global supply chains. The paper argues that industrial transformation requires a balance between strategic intervention and competitive discipline. Public support can facilitate learning, technological upgrading, infrastructure investment, and supply-chain adaptation, but its effectiveness depends on conditionality, institutional capacity, market contestability, and coordination with environmental and competition policies. Strategic-sector governance therefore requires an integrated framework in which industrial policy strengthens productive capabilities while competition regulation limits persistent market power and preserves incentives for innovation, entry, investment, and technological diffusion.