EU Industrial Policy After Second World War: Motivations, Sectoral Focus, and Lessons Learned
Main Motivations of EU Countries to Pursue an Industrial Policy After Second World War
After the Second World War, the European Union countries entered into an economic development plan with a solid infrastructure in which state intervention was at the forefront, after the devastating political, political, sociological, and economic problems. Various ways such as basic incentives and subsidies were applied to support the industrial transformation. One of these incentives was to correct the destruction caused by the war in economic terms. European countries realized that industrial sectors should be developed for economic development and they developed moves in this direction. During this time, the notion that bolstering the industrial sector would make it easier to compete with other nations emerged, and industrial policies were utilized as a weapon to encourage exports. Additionally, they are aware that there is a sufficient supply of goods and services to avoid reliance on imports. In addition, they renewed their production in technique and organization so that they could compete with the USA. As a result, there was a political motivation to enable industrial policies. Many European countries were concerned about their economic dependence on the US and wanted to strengthen their industrial capacity, become more autonomous and play a more independent and effective role in the world economy.
Sectors specially selected by European countries
While energy, transportation, heavy industry, automotive and chemical industries were within the priority incentive programs, state-supported investments and aids were made in a short time to sectors that formed the center of the economy, which were preferred by Western countries after the war, such as nuclear physics and space research industry. To eliminate the destructive effect of the war, to reduce the damage to the infrastructure of cities and buildings, rapid investments were made in the construction sector, and the damaged factories producing heavy industry and war technology were repaired and rebuilt, the main aim of the European countries was to eliminate the destructive effect of the war and have a stronger economy than before. , to increase employment, to increase the level of welfare, and to have an independent and strong economy. When low-wage nations began to compete with several traditional European industries, including shipbuilding and textiles, government-funded restructuring programs were put into place to keep these sectors alive. It was crucial to grow these industries, modernize and strengthen the European economy, and lessen reliance on foreign nations for necessities like commodities and services.
The Successes and Failures of Germany’s Industrial Policy
When we examine Germany from among the European countries, although it has pioneered in many fields and created different sectors, it has both successful and unsuccessful aspects.
- Germany has succeeded in gaining great power in the manufacturing industry. In this direction, it has increased its exports to many countries of the world with German quality in fields such as machinery, automobiles, and chemistry. At the same time, technology sciences in Germany have also developed, thus bringing technological innovation to a competitive position. In addition, the more the education systems of the countries have a good curriculum and quality education, the more developed the countries. Germany has given importance to vocational education and has succeeded in providing students with technical and hand skills in line with their potential.
- If we talk about the failures of digital technologies such as cloud computing in Germany during these periods, the adaptation process of digital technologies has been slow and has an old population instead of a young population. Germany’s industrial policies have been for their tendency to create “national champions” in certain sectors, which can hinder competition and innovation. For example, the country’s support for the automotive industry has received criticism that it may limit opportunities for small businesses and startups as it encourages the dominance of a few large firms. Despite these challenges, Germany’s strong infrastructure, education system, and technological innovation remain a strong foundation for the manufacturing industry.
As a result of this article, it is stated that governments should focus on horizontal policies rather than sectoral policies in industrial policies. In addition, it is emphasized that the tendency of politicians and bureaucrats to replace business managers should be avoided. The article also highlights the need to make the European market more competitive, to impose restrictions on protecting and supporting national companies and forcing companies to focus on businesses where they can increase their productivity and generate adequate returns. It is argued that sectoral aid should be distributed equally to strengthen the European industry. Among the three major European countries mentioned in the article, England made the worst mistakes in the first period and suffered as a result. The best-performing economy is West Germany, where the use of interventionist policies has been detrimentally limited. It showed a transition from selective intervention to horizontal policies in the period from the 1980s to the early 2000s. The creation of a more open and competitive European market has placed tighter constraints on the government’s ability to protect and support their national companies. This has forced firms to increase their productivity and focus on jobs that can generate an adequate return. Efforts to create this more integrated market have certainly improved Europe’s economic performance.
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