Industrial policy is back on the agenda across advanced economies, with a growing channelling support towards large incumbent firms on the premise that they are the most capable innovators. This column uses data on French manufacturing firms to argue that this premise deserves scrutiny. Firms become large primarily through occasional, large 'innovation bursts' rather than by innovating at persistently higher rates. The arrival of these bursts involves an element of chance, so a firm's current size says little about how much it will innovate in the future. Policies that entrench the position of incumbents may therefore slow down the churn that sustains aggregate growth.

Giuseppe Berlingieri, Maarten De Ridder, Danial Lashkari and Davide Rigo

11 September 2026

VoxEU

https://cepr.org/voxeu/columns/growth-through-innovation-bursts-why-industrial-policy-should-not-bet-size

This work is published under POID and the CEP's Growth programme.

This publication comes under the following CEP theme: Innovation drivers