Asymmetric North-South State Capabilities: Industrial Policies in the Automotive Global Value Chains

In the context of the “geoeconomic turn” in the global political economy and shifts in international trade, investment, and technology, there has been a “return of the state” and (green) industrial policy. This trend has become even more relevant as state actors increasingly seek to shape GVC structures to reduce dependencies and retain high-value-added activities, particularly in key strategic future (technology) sectors—an issue that gained prominence during the Covid-19 pandemic. Within the fields of International Political Economy (IPE) and Global Value Chain (GVC) research, there is growing attention to these new forms of governance that extend beyond purely regulatory modes of governance. We examine and discuss these new forms of governance for the case of the automotive industry’s transition to electrification, a shift with significant consequences for industry restructuring. This transformation is crucial not only within the EU, a central automotive hub, but also for India and Brazil—two key (production) countries on the periphery of automotive production. While the EU has traditionally been known as a “regulatory state,” primarily governing through regulation, recent shifts in industrial policymaking indicate the emergence of “developmental functions” in facilitating battery innovation and production networks. This reflects a partial shift in the relationship between markets and states. In contrast, Brazil and India face challenges in leveraging national policy and labor power to achieve not only functional upgrading in this moment of transformation but also social upgrading - despite recent noteworthy industrial policy initiatives. These difficulties stem from historically entrenched asymmetric power dynamics within the automotive GVC and limited economic development opportunities.