ECONOMY – Strategic State and Industrial Sovereignty of France after 25 years of slowdown : Ideas from Europe, Asia and the United States for Reindustrialization
By François Souty
François Souty, PhD in Economic History, former International Affairs Officer at the European Commission’s Directorate-General for Competition (2021-2024), was a member of the OECD Expert Committee on Competition Policy from 1996 to 2024. He teaches European institutions and geopolitics at the Excelia Business School group (La Rochelle-Paris Cachan) as well as European competition law and policy at the Faculty of Law of the University of Nantes. He is head of the economics section at Le Diplomate Media.
« Grandir sa force à la mesure de ses desseins, ne pas attendre du hasard ni des formules ce qu’on néglige de préparer, proportionner l’enjeu et les moyens : l’action des peuples, comme celle des individus, est soumise à ces froides règles. Inexorables, elles ne se laissent fléchir ni par les plus belles causes ni par les principes les plus généreux. »
Charles DE GAULLE, La France et son armée, Paris, Plon, 1938, p. 196. ¹
Since China’s entry into the World Trade Organization in December 2001, the nature of the world economy has changed. Globalization has not made states disappear; on the contrary, it has profoundly transformed the conditions in which they exercise their power. Industrial policy, long considered in much of the Western world as a legacy of the past, has once again become a central instrument of international competition. China, the United States, Japan, South Korea, Taiwan and, more recently, India have gradually adapted their economic and industrial policies to an environment in which technology, industry, finance, energy, trade and national security are now closely intertwined.²
The European Union clearly became aware of this transformation later than the above-mentioned states. Mario Draghi’s report on the future of European competitiveness, submitted in September 2024, provided the most comprehensive diagnosis: lagging innovation, energy prices, technological dependencies, insufficient investment and fragmentation of the European market are now all economic and strategic vulnerabilities.³ Our article in December 2025 on the consequences of the Draghi Report for France showed that it could – and even should – be read as an invitation to rebuild a European and national capacity for economic action.⁴
Our studies devoted since then to China, the United States, Japan, South Korea, Taiwan and India have made it possible to complete this analysis by observing strategies that have actually been implemented over twenty-five years.⁵ The study devoted to the strategic state in Europe and France then made it possible to place these experiences in a comparative perspective and to ask a question that has become central: does France still have the instruments to transform its scientific, industrial and technological advantages into sustainable economic power?⁶ Finally, our analysis of economic Gaullism and state action between 1958 and 1974 reminds us that France has already experienced a period during which the public authorities knew how to prioritize their actions, organize major investments and place economic action in a long-term strategic vision. Far from proposing to duplicate today a policy that was the expression of an exceptional will in a period and a context that is totally total, this French experience nevertheless allows us to draw perspectives and principles adapted to 2027.⁷
Obviously, it is not a question of reproducing foreign models, whose institutions and traditions differ profoundly, nor of mechanically resurrecting the model of the French industrial state of the Glorious Thirty, as we have just observed. Rather, it is a question of identifying, through these experiences, the instruments likely to respond to the French inadequacies that have emerged since 2001. Three sets of proposals can thus be distinguished: those that result directly from the diagnosis and recommendations of Mario Draghi’s report; those that emerge from the cross-observation of the transformation and adaptation practices – with real success – of Japan, South Korea, Taiwan and India; and finally those that the American return to an assumed industrial policy makes it possible to identify. Their confrontation leads to proposing the contours of a French strategic state adapted to the twenty-first century.
I. The lessons of the Draghi report: rebuilding Europe’s capacity for action
The Draghi report is of particular interest to France because it does not reduce the European problem to that of labour costs or price competitiveness. On the contrary, it highlights a much deeper inadequacy : Europe – and particularly France – is no longer sufficiently transforming its scientific potential, its savings and its internal market into productive and technological capacities. The three priorities identified by Draghi – closing the innovation gap, linking decarbonisation and growth, reducing dependencies – thus constitute three dimensions of the same question: how can we regain a European capacity for economic action in a world where economic dependencies can quickly become geopolitical vulnerabilities ?⁸
The first consequence for France is therefore to place its reindustrialization realistically and pragmatically – at least in part – within a European framework. The size of the American market, the Chinese industrial power and the global concentration of certain technologies make illusory a French strategy that claims to rebuild everything on its own. But the opposite would be just as dangerous: a Europe incapable of prioritizing its industrial priorities would only juxtapose twenty-seven national policies without reaching the necessary critical mass.
The first priority should be innovation. It is no longer enough to produce quality research; research must be transformed into industrial production much more systematically. This means strengthening the bridges between laboratories, universities, technology centres and companies, but also facilitating the transition from young technology companies to world-class industrial companies. The challenge is therefore no longer just that of start-ups, but that of transforming them into scale-ups, and then into companies capable of producing, exporting and investing sustainably.
The second priority concerns energy. European industry will not be able to compete in the long term with the United States and Asia if it bears energy costs that are structurally higher than those of its competitors. For France, this means making full use of the advantage of its nuclear fleet, accelerating investment in networks and giving electro-intensive industries sufficient visibility on their supply conditions. Energy policy must therefore once again become a component of industrial policy.
The third priority is that of dependencies. It is not a question of seeking autarky, but of identifying the critical points whose loss could deprive France or the European Union of freedom of decision-making. Semiconductors, artificial intelligence, digital technology, pharmaceuticals, batteries, advanced materials, energy, space, defence and industrial machinery must be considered not only as markets, but as productive capacities likely to be of strategic importance.
This new concept also presupposes an evolution of imperative public procurement , which we must stop talking about so as not to implement it energetically and vigorously. The State and local authorities must not only buy at the best price in the short term; they can, in compliance with European law, contribute to the emergence of markets for technologies whose industrial viability depends precisely on a sufficiently large initial outlet. Defence, space, energy, digital infrastructure, cybersecurity and certain medical technologies offer considerable possibilities here.
Finally, financing must be redirected towards long-term productive investment. Europe has abundant savings, but it does not sufficiently transform them into industrial and technological capital. The mobilisation of European savings, the deepening of the Capital Markets Union and the development of financing instruments adapted to industrial investments are therefore a condition for economic sovereignty, without giving up political sovereignty.
Understood in this way, the strategy resulting from the Draghi report leads to a simple conclusion: Europe must become again a real area of economic power. But this transformation presupposes that France itself – almost as a prerequisite and by its main will – is capable of defining its own priorities and participating in their European translation.
II. Asian education: from industrial policy to the mastery of the chains of sovereignty
The observation of Japan, South Korea, Taiwan and India provides a second series of lessons. Obviously, these countries have neither the same political regimes nor the same economic structures. However, their evolution since 2001 reveals one constant: industrial policy is only effective when it is conceived as a long-term strategy involving the state, companies, research, finance and infrastructure. All these countries have managed to avoid deindustrialisation and even, in the case of Taiwan, to increase the industrial share of their GDP to more than 30% (10% for France, alas).
The first lesson is that of continuity. An industrial policy cannot be reduced to a succession of plans, tax credits or administrative measures. It must identify a few priorities and pursue them long enough to allow companies to invest. Japan, South Korea and Taiwan have shown that the effectiveness of public intervention depends as much on its continuity as on its volume.
France should therefore have a genuine ten-year industrial doctrine, regularly evaluated but stable enough to enable companies to make investment decisions. This doctrine should identify a limited number of value chains, the control of which is a condition for the country’s economic freedom.
The essential question is no longer just to know which products France manufactures, but which links in the value chains it controls. In some sectors, the extraction of raw materials is not even the main point of dependence: refining, processing, manufacturing components, holding patents or mastering machines can be much more decisive points of concentration.
This approach leads to the proposal of a real French mapping of sovereignty chains. It should make it possible to identify critical dependencies, alternative suppliers, available European capacities, technologies that would need to be rebuilt and those whose security could be achieved through international partnerships.
This policy should also change the conception of sovereignty. Industrial sovereignty does not necessarily mean that the capital of a strategic company must be entirely French. A foreign company can contribute to strengthening the national industrial base if it produces in France, develops its research there, trains its employees there, builds a network of suppliers and contributes to the national technological ecosystem. Conversely, a legally French company can be dependent if its technologies, supplies or critical production capacities are located entirely abroad.
The objective must therefore be the protection of capacities rather than the protection of an abstract nationality of capital. This implies giving particular importance to intellectual property, research centres, scarce skills, production capacities and critical infrastructure.
The Asian experience also shows the importance of intermediary companies. France has developed a dynamic policy in favour of young innovative companies, but it must now pay comparable attention to the transition from SMEs to mid-caps, then from mid-caps to international leaders. The consolidation of the fabric of intermediate industrial companies should become a strategic objective in its own right. Here again, we must stop talking about mid-cap SMEs and act to facilitate their operations, as they have been calling for years.
India adds a complementary dimension to this reflection: foreign investment can be used as an instrument of industrial reconstruction. The objective is not only to attract capital, but to integrate it into a productive strategy: localization of production, technology transfer, development of suppliers, training, research and export.
Finally, Japan, South Korea and Taiwan show that a modern industrial policy cannot separate technology from industry. Robotisation, artificial intelligence, electronics, semiconductors, new materials and automation must be considered as the productive infrastructures of the next generation. For a France faced with relatively high production costs, the stakes are particularly high: future competitiveness will be based less on the compression of labour costs or a sterile debate on the intangible maintenance of its pension system when all European countries are moving towards a share of capitalisation, than on productivity, technology and the ability to produce more value with fewer resources.
III. American education: the state as investor, regulator and first customer
The American experience complements the previous ones in a particularly instructive way. The United States has long embodied a model in which innovation seemed to be left to the dynamism of the market alone. However, since the beginning of the twenty-first century, and even more so with the CHIPS and Science Act and the Inflation Reduction Act, Washington has gradually reinvested in industrial policy instruments, linking them to national security, technological policy and international competition.⁹
The first American lesson concerns taxation. Tax credits can become instruments of industrial policy when they are sufficiently large, predictable and conditional on specific objectives. France already has such instruments; however, it could direct them more towards strategic productive investment, industrial R&D, the location of critical capacities and the increase of export capacities.
The second lesson is that of the client state. A strategic technology cannot reach an industrial scale if it does not have an initial market. The American government has long used its purchasing power, particularly in defence and advanced technologies, to create this market. France and Europe could make greater use of this function of public procurement in sectors where public demand can contribute to the emergence of a competitive industrial offer.
The third lesson lies in the creation of territorial ecosystems. The United States is not only seeking to attract a factory; it is seeking to build a group of companies, suppliers, universities, research centres, infrastructure and skills around it. Industrial policy then becomes an ecosystem policy.
The fourth lesson concerns the link between trade and industrial policy. American economic security no longer separates trade, industrial, technological and strategic instruments as clearly. Restrictions on the export of certain technologies, controls on investments, security of supplies and policies to support national production are all part of the same package.
For Europe, and particularly for France, however, this development calls for adaptation rather than imitation. The European Union remains committed to a legal framework based on the internal market, competition and trade openness. However, these principles should not prevent us from recognising that certain technological or industrial capabilities have a strategic dimension that justifies specific instruments.
France would thus be able to better articulate industrial policy, European trade policy, investment control, competition policy and economic security. Competition law should not be abandoned; on the contrary, it must continue to protect the functioning of markets while integrating more, where necessary, the requirements of resilience, innovation and economic security. France must be more active in depth in the European institutions through the presence rather than through the media speeches of a few representatives of the State (President of the Republic, ministers), which are not followed by practical effects.
The same logic applies to critical raw materials. France and Europe should combine diversification of suppliers, partnerships with producing countries, stockpiling where relevant, recycling, development of European processing capacities and participation in strategic sectors.
IV. For a French doctrine of the strategic state
The comparison of these three groups ultimately leads to a more general proposal. France does not necessarily need to choose – at this stage – between Mario Draghi’s European model, Asian experiences and the American return to industrial policy. It must extract from them the instruments compatible with its history, its institutions, its financial capacities and its European integration.
The first requirement is to prioritise (one of the great strengths of economic Gaullism between 1958 and 1970). One of the persistent shortcomings of French public policies lies in the dispersion of resources. The strategic state cannot be the one that promises everything to everyone. It must identify the areas in which public intervention is really justified by the importance of the stakes, the failure of the market, the strategic dimension of the technology or the vulnerability of a value chain. Several tens of billions are spent by reproducing from one year to the next mechanisms that have never been evaluated or questioned. This practice is eminently toxic at the dynamic level.
The second requirement is to coordinate. An industrial policy cannot be separated from energy policy, research, training, defence, foreign trade, taxation or European policy. The strategic state must be precisely the one that unites these policies around common objectives.
The third requirement is to evaluate. The strategic state is not the spendthrift state. Each axis of industrial policy should be accompanied by measurable objectives (including in the fields of education and health): productive investment, skilled jobs, exports, productivity gains, R&D, intellectual property, reduction of critical dependence or the creation of new industrial capacity. Aid that does not produce the expected results must be able to be redirected or even abolished.
The fourth requirement is to accelerate. This is probably one of the most important lessons of international comparison. The quality of a strategy is not enough if administrative, regulatory and financial procedures prevent its implementation within a timeframe compatible with those of international competition or economic times. The strategic state must therefore be a state capable of deciding, coordinating and executing quickly, without renouncing the rule of law.
The fifth requirement is European. In several areas — defense, energy, semiconductors, space, digital, raw materials — France cannot achieve a sufficient critical mass on its own. But Europe itself must agree to prioritize its priorities. The single market can only become a real instrument of power if it ceases to be just a system for piling up standards or a simple area of free movement and also becomes an area of investment, innovation and production.
Conclusion
Since 2001, France’s main weakness has not been the absence of specific industrial policies, but the absence of continuity and strategic prioritization. France has retained sectors of excellence, but without always sufficiently protecting the value chains, technologies, intellectual property, intermediary companies and the financing capacities that allow them to be renewed.
The comparative lessons of Japan, South Korea, Taiwan and India are that an effective industrial policy requires continuity, sectoral targeting, patient financing, integration between research and industry, support for exports and securing value chains. The Draghi report adds the European dimension that is essential for the time being, if France can derive immediate benefit from it: single market, energy, financing, innovation, defence and economic security. In too many areas, France draws a handicap from the European fact: incoherent energy policy (the case of nuclear power), defence (American purchasing policies of many European states to the detriment of European producers, etc.) ¹⁰ Finally, the American experience adds a decisive element: the state can once again become an industrial player without becoming the owner of the economy, by combining taxation, financing, public procurement, research, regulation and protection of critical technologies. In particular, the United States has shown that the state can simultaneously create the industrial supply and demand necessary for its emergence. In this area, the French political class must break with the ideology of communising the means of production at all costs from the 1950s to 2020s.
It then remains to define what the strategic state of the twenty-first century could be, for France. It cannot be a nostalgic return to the producing state of the 1960s, nor a simple transposition of American or Asian instruments. It should be a state capable of methodically knowing its dependencies, choosing its priorities, mobilizing its resources, coordinating actors and evaluating its results.
French industrial sovereignty therefore does not mean autarky or closure; it means the ability to choose one’s dependencies, to master one’s critical capacities and to be able to cooperate without being subjected to it.
Charles de Gaulle’s formula regains its full meaning here: "proportionate the stakes and the means".¹¹ A truly strategic industrial policy begins precisely with this: knowing what is essential, measuring what the country can reasonably undertake, concentrating resources on the capacities that condition its freedom of choice and accepting, for the rest, cooperation, specialization and interdependence. The strategic state is not the one that wants to control everything; it is the one that knows what it absolutely must master in order to remain free.
Annex I — Three potential sources of inspiration for a new French strategic state
| Strategic focus | Draghi/Europe Report | Japan, South Korea, Taiwan, India | United States | French translation |
| Industry | European reindustrialisation | Long-term sectoral strategies | Offensive industrial policy | Ten-year industrial doctrine |
| Energy | Cost reduction and decarbonization | Energy security and competitiveness | Production, investment and incentives | Nuclear, networks and competitive prices |
| Innovation | Technological catch-up and scale-up | Industry-Integrated Research | State-supported R&D | More industrialized research |
| Critical technologies | Reducing dependencies | Control of value chains | Protecting Critical Technologies | Mapping of critical dependencies |
| Funding | Mobilisation of European savings | Public-private coordination | Credits, loans, subsidies and taxation | Savings oriented towards industrial investment |
| Companies | European scale-ups | Mid-caps and export champions | Large companies and ecosystems | Specific policy for mid-caps |
| Public procurement | European Markets | State as support for demand | Client State and Major Programs | Strategic public procurement |
| Foreign investment | Filtering and economic security | FDI integrated into the industrial strategy | Screening and National Security | Attraction of FDI under industrial conditions |
| Intellectual property | European protection | Technological mastery | Strategic protection | Critical Technology Asset Defense |
| Raw materials | Diversification and economic security | Securing supplies | Stocks, diversification and trade policy | Inventory, partnerships, recycling and processing capabilities |
| Defence | European DTIB | National autonomy and capacities | Integrated Defence Industrial Base | French and European DTIB |
| Trade | Opening with economic security | Export-oriented industrial policy | Trade linked to national security | Strategic Trade Policy |
| Administration | Simplification and acceleration | Close state-industry coordination | Specialized agencies and buying power | Strategic and evaluated economic administration |
Notes
¹ Charles DE GAULLE, La France et son armée, Paris, Plon, 1938, p. 196 : " To increase one’s strength to the measure of one’s designs, not to expect from chance or formulas what one neglects to prepare, to proportion the stakes and the means: the action of peoples, like that of individuals, is subject to these cold rules. Inexorable, they allow themselves to be bent neither by the most beautiful causes nor by the most generous principles."
² François SOUTY, "The European Union, the Draghi report on the future of European competitiveness: what inspiring strategic consequences for France?", Le Diplomate Média, 9 December 2025, 14 p.
³ Mario DRAGHI, The Future of European Competitiveness. A Competitiveness Strategy for Europe, Brussels, European Commission, 9 September 2024, part. A, 69 p.; id., The Future of European Competitiveness. In-depth Analysis and Recommendations, Brussels, European Commission, 9 September 2024, part B, 328 p. The report identifies innovation lag, energy costs and economic dependencies as three major vulnerabilities of the European Union.
⁴ François SOUTY, "The European Union, the Draghi report on the future of European competitiveness: what inspiring strategic consequences for France?", op. cit.
⁵ François SOUTY, "The return of the strategic state: the industrial policy of the United States between power, national security and technological competition (2001-2025)", Le Diplomate Média, 11 June 2026, 45 p.; id., "The transformation of Japanese industrial policy in the face of the Chinese challenge and American digital domination (2001-2025): from the Developmental State to the Economic Security State", Le Diplomate Média, 17 June 2026, 53 p.; id., "The transformation of South Korean industrial policy (1997-2025): from the Asian crisis to economic security", Le Diplomate Média, 24 June 2026, 40 p.; id., "The recomposition of the Taiwanese industrial state since China’s accession to the WTO (2001-2026): from globalisation to economic security", Le Diplomate Média, 1 July 2026, 33 p.; id., "The recomposition of India’s industrial state since China’s accession to the WTO (2001-2026): from manufacturing emergence to geoeconomic power", Le Diplomate Média, 9 July 2026, 38 p. The five studies form the comparative basis for this analysis.
⁶ François SOUTY, "The strategic state in Europe and France since China’s accession to the WTO (2001-2026): reindustrialisation, competitiveness, economic sovereignty and efficiency of public action", Le Diplomate Média, 23 July 2026.
⁷ François SOUTY, "Charles de Gaulle, the State as a strategist and the economy (1958-1974): What inspirations for France in 2027?", Le Diplomate Média, 4 September 2026.
⁸ Mario DRAGHI, The Future of European Competitiveness, part A, above, in particular pp. 10-15; European Commission, Competitiveness Compass, COM(2025) 30 final, Brussels, 29 January 2025. The Commission has explicitly presented the Competitiveness Compass as an operational translation of the Draghi diagnosis, around innovation, decarbonisation and the reduction of dependencies.
⁹ CHIPS and Science Act of 2022, Pub. L. No. 117-167, 136 Stat. 1366 (2022); Inflation Reduction Act of 2022, Pub. L. No. 117-169, 136 Stat. 1818 (2022); François SOUTY, "The Return of the Strategic State: The United States’ Industrial Policy Between Power, National Security and Technological Competition (2001-2025)," op. cit.
¹⁰ Mario DRAGHI, The Future of European Competitiveness, supra; European Commission, Competitiveness Compass, supra. The Commission states that the Compass is the roadmap for translating the recommendations of the Draghi Report into European action.
¹¹ Charles DE GAULLE, La France et son armée, supra, p. 196.
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