This is a summary of a panel about the Europe’s Industry (After 2008 Economic Crisis)
In this paper, I will try to give a summary of the article which is mainly about the EU’s industrial policy. In the article, first of all, EU’s industrial state is being evaluated, then some possible solutions and suggestions are being held by different panellists. Regarding the article; it is a well-known fact that Europe’s industrial policy needs some regulations; therefore, “Europe needs a functioning and well-thougth-through industrial policy if it is to beat the crisis and bring back economic growth in the face of growing competition” the author asserts in his article. Is the decline of industrial manufacturing in Europe over-exaggerated? Is a European or national industrial strategy going to be the answer? These are two main questions debated by two panels.
Giles Meritt said that EU and USA have retreated in respect of their economy since the strat of the crisis by referring to the Economist’s Proust Index. All of the panelists had accepted the fact that Europe is in the decline. Indeed, Europe needs to act now if it is to address industry’s major challenges, which are: the lack of investment that hampers innovation; both internal and global market issues; the scarcity of finance due to the ‘credit crunch’ and the availability of skilled human capital in engineering and science. Because of this, the commission has proposed four pillars of a reinforced industrial policy which are intended to provide the right framework conditions for investment in innovation, focusing in six priority areas where Europe clearly has or had the potential to be world leader. It would also improve the functioning of the internal market and opening up of global markets. In addition to these, it would also mobilise public resources and unlock private funds; and equip the labour force with the transformative skills needed to compete on a global market. Although this communication has been broadly welcomed by industry, policy makers, the trade unions and other institutional players, some consider it to be one year too late, with the added challenge on the disagreement among the European Commission, the European Parliament and the Council, on the size of the budgetary envelope earmarked for this industrial policy.
In order to avoid some of the mistakes of the Lisbon Agenda, where ‘everyone signed up to it, but no one knew what to do about it,’ the commission is proposing three concrete targets in order to monitor progress to 2020, namely; to have 20% of industry in the GDP; increase trade of goods in the internal market to 25% from the current 20% and to have 25% of SMEs engage in markets outside Europe . After citing these the writer claims that: Europe needs to have a clear view where it wishes to remain the leader, where it definitely does not wish to be the loser, and where it sees new opportunities which it can exploit before anyone else. Europe needs a “step change” in its industrial policy.
Daniel Calleja Crespo, European Commission Director General for Enterprise and industry, said that in spite of the difficulties, in every crisis there is an opportunity, and sometimes I have the impression we are too negative in the assesment of our industry. With a serious startegy we can reverse the decline and create frowth and jobs. Crespo noted an array of Commission initiatives designed to address Europe’s industrial decline citing some truly worrying statistics. The first is that three million industrial jobs lost since the crisis started; the second is that industrial production is currently 10% lower than pre-crisis. In addition to these, he cites that consumer and business confidence is currently very low; and lastly, that there is a marked decline in manufacturing and competitiveness.
As we stated before, the commission has proposed four pillars for a more developed industrial sector. The first pillar of the Commission’s strategy is to focus on innovation. In this issue, there is a consensus that Europe must continue to innovate to survive and thrive. The second pillar of the Commission’s strategy is to improve market conditions. Calleja Crespo said that what is needed was to eliminate the bottlenecks in the internal market for goods and open up international markets. Another pillar of the Commission’s industrial strategy is to foster a climate which improves access to finance. Crespo said that the problem of financing will not be solved via the EU budget also because the size of the requested envelope remains under discussion with the Member States. But he said that structural funds can play a part as well as the other alternative avenues listed above. The last pillar, skills and human capital, seeks to address the mismatch of human capital and employment. Beside these four pillars, as it clearly is one of the keys to success of a European industrial policy, standardisation is also important issue regarding the debated subject.
In the conclusion part, Edit Herczog said Europe had to focus better. And added that we don’t have a clear view of where we wish to remain the leader, where we definitely do not wish to be the loser, and where we wish to see the new opportunities which we are not done by anybody else. I think this is where Industrial policy has to go. In fact, all of the panellists seems to be in favor of the proposed industrial policy. However, it should not be added that some of them had suggestions most of which are related to competitiveness and sustainability.