The Role of Industrial Policies in the Development of a Competitive Wind Energy Industry : the Danish and Chinese Sectoral Innovation Systems

In order to shed lights on the process of building a competitive green industry, the paper leverages the analytical framework of innovation systems to comparatively analyze the growth of the Chinese and Danish wind industries. Framing the analysis through the evolution of the wind turbine technology, the differences and similarities between the configurations of the two sectoral innovation systems are discussed and the key conclusions from the perspective of a policy maker are presented. The analysis suggests that the function of knowledge creation, which is the most related to the technological stage, can be performed differently according to state of the art of the technology and to the maturity of the relevant domestic green sectoral system. At the same time, the nature of green technologies reinforces the interaction between the functions of knowledge generation and market formation. Environmental policies should therefore be carefully designed in order to be «incident» and to correctly frame buyers’ incentives. In addition, the Danish case underlines how demand-side policies can be instrumental in both increasing the leverage of private finance and lowering the risk of NIMBY syndrome. Both cases are characterized by mechanisms to curb inertia.