History of Industrial Policy in Europe
In the context of the following article, I am going to assess and clarify the background of European industrialization by responding to three important inquiries about European industrialization.
“What were the main motivations of EU countries to pursue an industrial policy after Second World War?”
Whereas during postwar reconstruction period, the Countries in europe looked for new ways to re-establish their industries. Participants were determined to do so because the American industry was growing much faster than theirs. While the United States and China were taking the lead in the global industry, the EU would not be left behind. The principal reasons for each of the West European countries were distinct. It was determined not to lose its “World Influence” status and engage with the United States for the United Kingdom and France, despite the fact that it was only re-establishing its industry after great destruction and bringing competition into the markets for Germany. Furthermore, following the war, all EU countries realized the importance of having a strong national industry. Based on this, the leaders of such an industrial policy in Europe were the United Kingdom and France, because Germany faces numerous constraints that prevent it from developing a massive industry capable of supporting a massive military
“What kind of sectors have been particularly chosen by the countries? Why?”
Aerospace, electronics, steel, nuclear power, automobiles, and defense were the primary sectors targeted by newly implemented industrial policies. Initially, European countries’ focus on these sectors was motivated by a desire not to leave these sectors to American firms. They were unwilling to let outsiders run these industries or abandon such sectors as they became aware of the need for a national and strong industry. With these thoughts in mind, European countries developed industrial policies in the hope of having an efficiently run and productive industry capable of competing with its American counterparts.
“Please choose one country and list success and failures of the respective country in terms of industrial policy it implemented.”
Because the United Kingdom was one of the locomotive locations where industrial policies were implemented after WWII, it is critical to understand the stages they went through and to learn from their mistakes. For starters, the United Kingdom has recognized the importance of numerous industries such as aeronautics, computers, steel, nuclear power, and automobiles. And thereby, beginning in 1950, those that constructed procedures for guaranteeing the functioning and productivity of these sectors during various governmental periods. One of the key focuses they have used to make these sectors competitive in comparison to those in the United States has been to incorporate some firms into a larger one that can reach scale and produce efficiently at lower costs. For example, this was accomplished to create a larger firm capable of competing with IBM and Intel of the United States in computer manufacturing. The United Kingdom has also used this policy in the steel industry to create a larger firm capable of competing with the United States steel industry. In order to generate cheap and sustainable energy, the United Kingdom has also adopted new nuclear reactor technologies. In order to achieve this goal, they implemented cutting-edge cooling technologies in nuclear power plants. While developing energy resources to ensure an effective industry, the United Kingdom has also taken care of some firms that are experiencing financial instabilities, particularly in sectors with high priority. RollsRoyce is one such representation. Lockheed Corporation of the United States had developed a civilian aircraft (Tristar) just at time, and they had decided to use a British jet engine (RB211 of Rolls-Royce) for this aircraft. Despite the fact that they agreed on the terms and conditions, things did not go as planned for Rolls-Royce. RollsRoyce was facing a financial crisis that could shut down their production plants due to the high cost of producing RB211 engines. Finally, they requested government assistance, and the government provided liquidity so that they would not go bankrupt and could continue to produce. Another industrial policy implemented by the UK government was additional funding to firms in need of liquidity. This policy has kept many businesses from going bankrupt. Despite the fact that they agreed on the terms and conditions, things did not go as planned for Rolls-Royce. Rolls-Royce was facing a financial crisis that could shut down their production system due to the high cost of producing RB211 internal combustion engine. Finally, they requested government benefits, and the government provided liquidity so that they would not go bankrupt and could continue to produce. Another industrial policy implemented by the UK government was additional funding to firms in need of liquidity. This policy has kept many businesses from going bankrupt. Because of United Kingdom used to have a history of aircraft projects that resulted in high costs and inefficient production. Though they were unwilling to participate in the Airbus project, they were also unwilling to allow the United States to become the dominant nation in the civil aircraft industry. As a result, they joined the Airbus project and invested 100 million pounds in this venture. But even though the United Kingdom acknowledged the significance of many sectors that are critical to its survival, there were many complaints about its industrial policies from the opposition party because the opposition party was opposed to government intervention in markets. As governments start changing, so do the industrial policies of the United Kingdom. And that this did not result in a long-term industrial approach or effective results. Because the sectors affected by these missteps were substantial, the UK government believed it was capable of correcting every single market collapse. That was yet another blunder made by the British federal govt
