European Industrial Policy after World War II
In this blog post I will examine the paper “Industrial policy in Europe since the Second World War: What has been learnt?” which was written by Geoffrey Owen and try to answer the questions: “What were the main motivations of EU countries to pursue an industrial policy after Second World War?”, “What kind of sectors have been particularly chosen by the countries? Why?” and will choose one country and list success and failures of the respective country in terms of industrial policy it implemented.
What were the main motivations of EU countries to pursue an industrial policy after Second World War?
After World War II, EU countries were highly damaged and economically shaken. According to this, an industrial policy was prepared to imply and the main aim of this industrial policy were to modernize industry sector especially the heavy machinery industry and steel, reorganize and optimize the economies of EU countries. Several motivations have helped the implication of industrial policy according to this article. First of all, it was tried to boost the competitive power of EU countries in the world and to ensure the growth in their economies by using industrial policies. The stable economy and employment were aimed by supporting further development of research and innovation. Secondly, to provide a national security the industrial policy was seen as significant. According to this, it was aimed to be more independence and provide security for EU societies by developing crucial industries for defense such as; aerospace. This aim was too significant for the EU countries since they have suffered a lot during the World War II and made countries realize that they need to have powerful defense sector. Thirdly, social cohesion goals were another significant driving force behind industrial policy, especially in societies with active labor unions. The aim of these societies were to provide equal distribution of economic profits and wanted to maintain social stability and they did this by encouraging an investment in significant industries. Since labor movements have taken place in France, this was particularly crucial for France. Another motivation for industrial policy was that European unification. The industrial policy was seen important for progressing in European unification. By creating industrial policies EU countries believed in that this help them to raise their competitiveness in global market. This motivation was important for EU countries to enhance and rebuild their economies. As a result, social, economic and political reasons played a role in implication of industrial policy.
What kind of sectors have been particularly chosen by the countries? and why?
First of all France preferred to focus on the industries such as; they were heavy industries and since France has history in industry they preferred to prioritize these heavy sectors first. They preferred to develop in these sectors because they wanted to decrease reliance on imports and encourage domestic production. However, the sectors that France become successful were electronics, steel an pharmaceuticals. Beside of France, Germany has decided to develop in high-technology sectors such as; automation and engineering while focusing on these sectors Germany aimed to increase productivity and evolve highly competent workforce. Lastly, the UK has developed several state-owned firms in the sectors such as; coal, steel, gas, and railways however, it did not limited by these sectors and UK has also had great interest in industries like computers and airplanes. UK government supplied funding for the development of civil aircraft, as the aircraft industry grew throughout the war and become significant. The experiences obtained throughout the World War II were the general justification for focussing on these sectors.
Successes and failures of France in terms of industrial policy it implemented
According to this paper, France has been successful in the sectors such as; electronics, pharmaceutical, defense electronics. The mentioned electronics sector was not only limited to semiconductors or computers, but also included industrial automation, medical electronics, TV sets and scientific instruments, and these were supported. Alcatel focused on telecommunication equipment and expanded outside of Europe. In addition, it merged with Lucent Technologies in the USA in 2006 and achieved great success. In addition to this, France also gained significant income from defense electronics. In addition to this, France also made significant amount of money from defense electronics. One of the France based firm that Aventis also became one of the biggest pharmaceutical firm in Europe after united with Hoechst in Germany, demonstrating its courage in the pharmaceutical industry. There were also cases where France has failed. For example, Rhône-Poulenc could not hold on in the petrochemical sector and started fine chemicals and pharmaceuticals. Later, the consumer electronics sector, which the French call “meccano industry”, has also been a difficult sector for the French to develop.
In conclusion, European industrial policies have been significant for the EU countries to develop their economies. Additionally, variables such as; political will, institutional capability, and market conditions played a significant role to these industrial policies to be successful. However, these kind of industrial policies cannot be successful if any economic policies did not apply to deal with economic problems.
https://ecipe.org/publications/industrial-policy-europe-second-world-war-what-has-been-learnt/
