Europe's Economic Challenge: Analyses of Industrial Strategy and Agenda for the 1990s (Industrial Economic Strategies for Europe)

163 Pages·1994·1.93 MB·English

by  Patrizio Bianchi

EUROPE’S ECONOMIC CHALLENGE
INDUSTRIAL ECONOMIC STRATEGIES FOR EUROPE
EUROPE’S ECONOMIC CHALLENGE
Analyses of Industrial Strategy and Agenda for the
1990s
Edited by Patrizio Bianchi,
Keith Cowling and
Roger Sugden
London and New York
First published 1994
by Routledge
11 New Fetter Lane, London EC4P 4EE
This edition published in the Taylor & Francis e-Library, 2005.
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Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
© 1994 Patrizio Bianchi, Keith Cowling and Roger Sugden
All rights reserved. No part of this book may be reprinted or
reproduced or utilized in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Europe’s economic challenge: analyses of industrial strategy and
agenda for the 1990s/edited by Patrizio Bianchi, Keith Cowling
and Roger Sugden
p. cm.—(Industrial economic strategies for Europe)
Includes bibliographical references and index.
ISBN 0-415-11428-4
1. Europe—Economic policy. 2. Europe—Commercial policy.
3. Industry and state—Europe. 4. Industrial promotion—Europe.
I. Bianchi, Patrizio, 1952– . II. Cowling, Keith.
III. Sugden, Roger, 1958– . IV. Series.
HC240.E858 1995
338.94–dc20
94–14950
CIP
ISBN 0-203-40212-X Master e-book ISBN
ISBN 0-203-40846-2 (Adobe eReader Format)
ISBN 0-415-11428-4 (Print Edition)
CONTENTS
List of figures vii
List of tables v iii
Introduction ix
Chapter abstracts xii
Chapter 1 Policy Mix and Industrial Strategies 1
Jacques De Bandt
Chapter 2 Industrial Strategy in an Open Economy 11
Patrizio Bianchi
Chapter 3 Industrial Strategy: Guiding principles and European context 26
Keith Cowling and Roger Sugden
Chapter 4 Industrial Policy in Europe and Industrial Development in the Third World 40
Ajit Singh
Chapter 5 Industrial Strategy: Process or content? Insights from the Austrians 52
Pat Devine
Chapter 6 Innovation, Entrepreneurship and Industrial Districts 58
Peter Dorman
Chapter 7 European Community R&D Support: Effects on the cooperative behaviour of firms 72
Y.Katsoulacos and E.Nowell
Chapter 8 Does a Reduced Public Sector Increase Welfare in an Open Economy? 90
Johan Willner
Chapter 9 Continuity and Change in Portuguese Industrial Policy: Mobility regulation in the 1 04
textile and clothing markets (1946–1992)
João Confraria
Chapter 10 British Industrial Policy in the Light of Traditional Theory and More Recent 1 14
Developments in Economics and Management
Christos Pitelis
Chapter 11 Taming the Balance of Payments Constraint with a Sectoral Policy for Auto 1 25
Candace Howes
vi
Index 1 38
FIGURES
2.1 A closed economy 15
2.2 Customs union 19
8.1 The reaction functions of country 1 and country 2 95
8.2 The optimal public sector when productivity differs 101
TABLES
2.1 Coalitions formed under the Smithian scheme and the Ricardian scheme 13
2.2 Effects on social classes of opening a closed economy 16
6.1 A typology of production forms 66
7.1 Number and percentage of firms involved in SCAs 77
7.2 Impact of CEC decision on non-selected applicants’ research effort 78
7.3 Non-selected applicants’ market position and SCAs 79
7.4 Nature of SCAs among successful participants 80
7.5 Nature of SCAs among non-selected applicants 80
7.6 Research-related outcomes from SCAs 80
7.7 Objectives of forming RJVs (successful participants) 81
7.8 Objectives of forming RJVs (non-selected applicants) 81
7.9 Market relationship of partners in collaborative activities 82
7.10 OCA partnership success and SCAs (successful participants) 84
7.11 Reasons for not engaging in SCA (successful participants) 84
7.12 Reasons for not engaging in SCA (non-selected applicants) 85
7.13 Motives for SCAs for commercial development, production and marketing 86
7.14 Demand growth and substitutability of SCA products 86
9.1 The legal minimum dimension in the textile markets 105
9.2 Number and size distribution of incumbents 107
9.3 Size distribution of incumbents—spinning, weaving and finishing 109
9.4 Size distribution of incumbents—clothing 110
9.5 Linear correlation between firm and investment sizes 110
9.6 Projects supported according to type of investments —spinning, weaving and finishing 111
9.7 Projects supported according to type of investments —clothing 111
11.1 Balance of payments and competitiveness 126
11.2 Percentage shares of fourteen-country OECD manufacturing output by industry, for 1985 129
11.3 Merchandise imports, exports and balance of trade by sector 130
INTRODUCTION
Industrial economic strategies for Europe: Preparing for the turn of the
century
Europe is currently at a crucial stage in its economic, social and political development. Many questions are
being asked about the appropriate way forward, partly in the light of the Maastricht Treaty but also more
generally. Most of these questions are unanswered. For example, although the importance of the European
level initiatives in economic policy has increased over recent years, numerous questions about the
contribution that European policy can make to thriving industries and regions remain unexplored. In
Britain, for instance, many have replaced their traditional blindness to Europe’s existence with a very
narrow and unimaginative perspective; membership of the European Union is merely seen to impose
constraints which need to be avoided. The possibility of membership offering positive opportunities for future
development poses many issues that seem to be ignored by many people and that need detailed exploration.
In Germany, questions over future European policy arise in the context of restructuring in the East. This
raises queries about long-term strategy, and about the relationship between industrial and environmental
policies. In addition, for various reasons completion of the European internal market is likely to give new
momentum to the issue of efficiency. For example, the decisions of the European Court of Justice, by
enforcing European Anti-Trust Law, may pressurize the Federal Government into questioning vested
interests. Moreover, the Single European Act’s principle of mutual recognition may open up a ‘competition
of systems’ and act as a threat to more regulated sectors of the economy. Meanwhile in The Netherlands,
for example, there is concern that future policy will be dominated by larger economies, especially Germany,
and thus be inappropriately designed. Similar worries can be seen in such countries as Greece and Portugal.
More generally, there are fundamental queries about the proper allocation of responsibilities for various
policies at the national and the Union levels, e.g. in the light of a potential conflict between structural and
competition policies. Indeed this potential conflict is itself a basic issue; the traditionally broad approach of,
say, France raises interesting questions in comparison with the emphasis on competition policies that has
been seen in the Union.
All of this suggests that further discussion and analysis of Europe’s future is needed. Moreover the time
is especially ripe, given the massive job losses predicted to result from the European Union’s 1992
initiatives for instance. This programme is in many ways the Union’s most ambitious industrial economic
initiative to date, but its potential welfare implications have already been questioned. Likewise the
questioning implied by the Maastricht Treaty and the consequent break for thought that this precipitated
makes further discussion and analysis of Europe’s future an urgent priority. In addition, the Community has
become so preoccupied with monetary union that other concerns, focusing directly on the ‘real’ economy’s
development, have been neglected; it is high time this balance was redressed. Furthermore the recent
changes in Eastern Europe reveal that the continent is currently in a period of massive change and thus
exciting opportunity. Removal of the ‘Iron Curtain’, transition from centrally administered systems and