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Industrial Policies in Europe in Historical Perspective

Author

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  • Christian Grabas
  • Alexander Nützenadel

Abstract

This research paper provides a solid historical overview of European industrial policy during the post-WWII era, extending the time horizon up to the 1990s. Our research focus is the EU 15. Unlike previous publications, this paper outlines the most important characteristics and drivers of European industrial policy in a comparative and transnational perspective in order to provide some conclusions about policy impacts, historical policy continuities and national policy convergence, looking at changing institutional settings especially in transition periods and asking finally how these historical lessons could be fruitful for further research on future effective political action. This paper provides unequivocal evidence that state industrial policy in Europe after 1945 had been always one of the most controversial policy fields and that its scopes and instruments differed greatly between countries and changed over time. Industrial policy was not a novel phenomenon of the postwar era. Beyond the immediate goals, it was part of what can be considered the economic culture of every country. National traditions, historical legacies and path-dependencies did play an important role and may explain the enormous differences between nations and regions in Europe, even when they had to face similar challenges. The paradigm shift towards an interventionist industrial policy approach implemented in most European countries after 1945, which persistently prevailed until the 1990s, fostered economic structural change and was partially very effective in supporting high economic growth during the prosperity years, but had often led to an inefficient allocation of national economic resources in many countries in the longer run. The more important and effective factors that enhanced industrial productivity in the long run, were, firstly, industrial policies establishing national and/or regional promising effective incentive structures for the private sector, and secondly industrial policies encouraging openness to trade and investment, by creating an international environment favourable to competition, innovation and technology transfer. For Western Europe, it was increasing trade and investment openness, largely, but not exclusively, under the heading of European integration.

Suggested Citation

  • Christian Grabas & Alexander Nützenadel, 2013. "Industrial Policies in Europe in Historical Perspective," WWWforEurope Working Papers series 15, WWWforEurope.
  • Handle: RePEc:feu:wfewop:y:2013:m:7:d:0:i:15
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    File URL: http://www.foreurope.eu/fileadmin/documents/pdf/Workingpapers/WWWforEurope_WPS_no015_MS66.pdf
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    References listed on IDEAS

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    1. Karl Aiginger & Susanne Sieber, 2006. "The Matrix Approach to Industrial Policy," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(5), pages 573-601.
    2. Broadberry,Stephen & O'Rourke,Kevin H., 2010. "The Cambridge Economic History of Modern Europe," Cambridge Books, Cambridge University Press, number 9780521708395, March.
    3. Karl Aiginger, 2012. "A Systemic Industrial Policy to Pave a New Growth Path for Europe," WIFO Working Papers 421, WIFO.
    4. Elie Cohen, 2007. "Industrial Policies in France: The Old and the New," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 213-227, December.
    5. Broadberry,Steve N., 2005. "The Productivity Race," Cambridge Books, Cambridge University Press, number 9780521023580, May.
    6. Foreman-Peck, James, 2006. "Industrial policy in Europe in the 20th century," EIB Papers 2/2006, European Investment Bank, Economics Department.
    7. Smith, Ronald P., 1980. "Military expenditure and investment in OECD countries, 1954-1973," Journal of Comparative Economics, Elsevier, vol. 4(1), pages 19-32, March.
    8. Temin, Peter, 1997. "The Golden Age of European growth: A review essay," European Review of Economic History, Cambridge University Press, vol. 1(01), pages 127-149, April.
    9. Karl Aiginger, 2007. "Industrial Policy: A Dying Breed or A Re-emerging Phoenix," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 297-323, December.
    10. Chang, Hsin-Chen & Huang, Bwo-Nung & Yang, Chin Wei, 2011. "Military expenditure and economic growth across different groups: A dynamic panel Granger-causality approach," Economic Modelling, Elsevier, vol. 28(6), pages 2416-2423.
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    Cited by:

    1. Amat Adarov & Mario Holzner & Luka Sikic, 2016. "Backwardness, Industrialisation and Economic Development in Europe," wiiw Balkan Observatory Working Papers 123, The Vienna Institute for International Economic Studies, wiiw.
    2. Gunther Tichy, 2015. "Protecting social inclusion and mobility in a low growth scenario," WWWforEurope Working Papers series 100, WWWforEurope.

    More about this item

    Keywords

    Academic research; economic growth path; economic strategy; EU integration; European economic policy; industrial innovation; industrial policy; innovation; innovation policy; institutional reforms; new technologies; post-industrialisation;

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • F15 - International Economics - - Trade - - - Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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