Europe is experiencing a stagnation in the “core” countries around Germany and a depression in the Southern European “periphery”. This is the result of the crisis of 2008 and of the prolonged austerity policies introduced by Europe to address the problems of public and private debt, real estate bubbles and macroeconomic imbalances. The depression is destroying a large part of the productive base of the periphery, where industrial production is 25% (or more) lower than in 2008. In this context, several proposals have demanded a change from austerity to expansionary policies in order to restore growth. But, at the same time a new industrial policy is needed at the European level for reconstructing productive capacity and reducing imbalances.
First, in order to restart the economy, a substantial increase in demand is needed, which could come from a Europe-wide public investment plan targeted to the new activities on which a new phase of European growth could be based.
A second argument for a new European industrial policy has to do with the changes in Europe’s economic structure resulting from the crisis; major losses are taking place in industries, a downsizing of the inflated financial sector is needed, and no new large economic activities that could offer new useful products and services and provide new employment are yet emerging.
Third, a new EU-wide industrial policy is needed in order to reverse the massive privatisations of past decades, which have failed to provide growth and employment opportunities in most of the continent.
The need for greater cohesion and reduced imbalances within the EU and individual countries is the fourth reason for a new EU-wide industrial policy.Current changes in Europe’s industrial structure open up a growing divide between a relatively strong ‘centre’ and a ‘periphery’ where a large share of industrial capacity is being lost.
Fifth, a new EU-wide industrial policy could become a major tool for addressing the urgent need for an ecological transformation of Europe. Turning Europe into a sustainable economy and society – reducing the use of non-renewable resources and energy, protecting ecological systems and landscapes, lowering CO2 and other emissions, reducing waste and generalising recycling – goes well beyond the emergence of specific environmentally friendly new activities; it is a transformation that concerns the whole economy and society.
In addressing all these priorities industrial policy can be an important and flexible tool. In order to implement it effectively, there is a need for new institutional arrangements and funding sources, new mechanisms of accountable governance, efficient and effective operation, systematic links between the EU and the national and local levels, as well as forms of democratic control with participatory practices.
Mario Pianta is Full Professor of Economic Policy at the University of Urbino “Carlo Bo”, Department of Economics, Society and Politics and is a member of the Centro Linceo Interdisciplinare “Beniamino Segre”, Italian Academy of Sciences. He has been Fernand Braudel Fellow at the European University Institute, Visiting Scholar at the Centre for International Studies, London School of Economics, Chercheur invité at CRPS, Université Paris 1, Panthéon Sorbonne and Research fellow at Columbia University. He works on economic policies, innovation, industrial change, growth, employment and inequality. His last books are “Sbilanciamo l’economia. Una via d’uscita dalla crisi” (with Giulio Marcon, Laterza, 2013) and “Global justice activism and policy reform in Europe. Understanding how change happens” (ed. with P. Utting, A. Ellersiek, Routledge, 2012). See also works.bepress.com/mario_pianta/