Fiscally constrained developmentalism: IPCEIs and the development of innovative European industrial policy

How did Important Projects of Common European Interest (IPCEIs) become one of Europe's most potent yet underexamined industrial policy tools? This paper answers that question by tracing how IPCEIs evolved into a legal and fiscal workaround within the EU's state aid regime. Unlike existing work that treats IPCEIs as contemporary instruments, this is the first study undertaking a historical analysis of the Commission's legal rulings and administrative interventions. Using archival research, participant observation, and expert interviews, it shows how the Commission leveraged innovation rhetoric and legal discretion to carve out space for strategic public investment in what some scholars term a developmental network state. Born in the 1970s energy crises, IPCEIs grew from ad hoc national responses into a supranational mechanism for steering critical industries. The paper highlights an underappreciated developmental mindset within EU institutions - revealing a fiscally constrained yet quietly interventionist evolution not easily accommodated by the "derisking state" framework.