EU industrial policy

Written by  Dessislava Yougova,

One of the main challenges for the EU economy to stimulate economic growth is to kick-start the ‘industrial renaissance’ of Europe. In the current international context urgent action is needed to enhance industrial competitiveness; to promote innovation and sustainability as well as corporate social responsibility; to support the internationalisation of EU businesses; and to protect intellectual property. Industrial policy is a key issue in the Europe 2020 strategy , and the development of an integrated industrial policy is one of its flagship initiatives. EU industrial policy is a cross-cutting policy area integrated into a number of other EU policies related to trade, internal market, research and innovation, employment, and environmental protection.  In answer to a Parliamentary question , the European Commission enumerated the horizontal policy instruments that were set up: the Investment Plan to finance infrastructures needed for the modernization of industry, the Digital Single Market strategy to foster the digitalization of industry, the Internal Market strategy to improve the free movement of industrial inputs and outputs, the Capital Markets Union to facilitate access to finance for SMEs, the Energy Union and the Circular Economy Package to contribute to boosting industrial investment. Since the beginning of the current legislative term, several Parliamentary questions in relation to EU industrial policy were asked by MEPs. Recent studies also highlight the growing interest of stakeholders and policy makers in the issue of a ‘new’ model for European industrial policy.
EPRS publications:
Reshoring of EU manufacturing , EPRS briefing, March 2014, 6 p.
A snapshot of industry in Europe : Statistical spotlight, November 2014, 8 p.

Overviews

General principles of EU industrial policy , EP Fact sheets, 2015
Article 173 of the Treaty on the Functioning of the European Union (TFEU) provides the legal basis for the European Union’s industrial policy, which seeks to make European industry more competitive so that it can maintain its role as a driver of sustainable growth and employment in Europe.
Related EP fact sheets:
Small and medium-sized enterprises
European Regional Development Fund (ERDF)

Studies requested by the EP ITRE Committee

EU industrial policy: assessment of recent developments and recommendations for future policies , February 2015, 116 p.
This report provides an overview of the different EU initiatives and policies to foster competitiveness and growth as well as of their assessment by selected stakeholders and experts. The aim is to establish state-of-the-art of the EU industrial policy and to look at ideas, interests and institutions shaping the industrial policy at EU level.
How can European industry contribute to growth and foster European competitiveness? , Danish Technological Institute, WIK Consult, August 2014, 132 p.
This study describes the current state of the European industry, reviews factors that influence growth and competitiveness and analyses framework conditions that can be influenced by public authorities, particularly the European institutions, and in some cases at Member State level. It recommends options as to how European industry can contribute to sustainable growth and competitiveness in the EU. The paper is based on an extensive literature review, interviews with stakeholders, and case studies.

Selected analysis

Industrial and innovation policy as drivers of change , David Bailey, Lisa De Propris, Jürgen Janger, WWWforEurope, August 2015, 40 p.
This paper overviews Europe’s challenges with growth and prosperity, suggests a new definition of outcome competitiveness and discusses how to reconcile economic growth, social cohesion and the green shift.
Which industrial policy does Europe need? : Thematic issue, in: Intereconomics , Vol. 50, N° 3, May/June 2015
A set of articles related to the EU industrial policy and its role for the European and global economy.
Towards a New Industrial Policy for Europe , Claire Dhéret, Martina Morosi, EPC, November 2014, 82 p.
This study provides empirical evidence on the deindustrialisation process occurring across Europe, reviews the evolution of the industrial policy thinking over time and presents a series of policy recommendations. The conclusion is that “a shift towards a coordinated approach at all levels, between Member States, across industry, between public and private entities, across all governance levels and the different Directorates-General of the European Commission, is required”.
Toward Modern European Industrial Policy , Matjaž Nahtigal, in: Managing Global Transitions , Vol. 12, N° 2, June 2014, 16 p.
This article analyses the EU legal framework for industrial policy, examines the concept of neutrality of the European Single Market and discusses the possibilities for a plurality of industrial and development policies, using examples of successful regional industrial policies in some of the most advanced European regions.
Industrial Policy in Europe : EFTA report, Paul Rübig, Gunnar Gundersen, EFTA, March 2014, 11 p.
The purpose of this report is to highlight the main initiatives taken by the European Commission over the last years in the area of industrial policy, and to take a look at the new Commission’s plans for industrial policy.
Green industrial policy , Dani Rodrik, in: Oxford Review of Economic Policy , Vol. 30, N° 3, 2014, p. 23
This paper reviews the theoretical case for green industrial policy as well as the arguments against. It provides a brief overview of the range of green industrial policies already in place in the United States, Germany, China, and Japan. A key objective is also to show how the practice of industrial policy can be improved by designing institutional frameworks that counter both informational and political risks.
Structural asymmetries at the roots of the Eurozone crisis: What’s new for Industrial policy in the EU?, Alberto Botta, Levy Economics Institute, 2014 – abstract
This paper analyses existing asymmetries between central and peripheral economies in the euro-zone. It concludes that the EU industrial policy should be regionally focused and more interventionist than it currently is.
From old to new industrial policy via economic regulation , Mark Thatcher, in: Rivista della regolazione dei mercati , 2, 2014, 24 p.
This article argues that economic regulation and industrial policy can be compatible and that the spread of economic regulation has given rise to a new form of industrial policy in Europe. It concludes that “although in Europe, traditional national industrial policies have been greatly reduced, market regulation designed to promote competition has provided new instruments, which have been used to support European champion firms”.
Industrial policy in the EU: A guide to an elusive concept , Xavier Vanden Bosch, Egmont Paper 69, 2014
The aim of this paper is to clarify the scope of the EU industrial policy, its objectives and its instruments that could be used at different level of governance.
Industrial Policy in Europe since the Second World War: what has been learned? Geoffrey Owen, ECIPE Occasional Paper, No. 1/2012, 59 p.
This study reviews the European experience regarding the industrial policy. It considers mainly sectoral or targeted industrial policy, designed to improve the performance of particular industries. The main conclusion is that “industrial policy should be horizontal rather than sectoral, and embedded in a set of policies and institutions which promote competition, encourage innovation and facilitate industrial change”.

Recent key EC Communications

2014 – For a European Industrial Renaissance
2012 – A Stronger European Industry for Growth and Economic Recovery
2012 – Entrepreneurship 2020 Action Plan
2011 – Industrial Policy: Reinforcing competitiveness
2010 – An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage

Sources for funding

European Fund for Strategic Investments (EFSI)
The European Commission adopted the legislative proposal to put in place the European Fund for Strategic Investments, which will mobilise additional investments in the real economy in areas including infrastructure, education, research, innovation, renewable energy and energy efficiency. It will also focus on SMEs and mid-cap companies (companies with between 250 and 3000 employees). The EFSI should target projects that promote job-creation, long-term growth and competitiveness.
See also Questions and Answers
EU funding programmes
The Commission makes direct financial contributions in the form of grants in support of projects or organisations which further the interests of the EU or contribute to the implementation of an EU programme or policy.
Member States are responsible for managing programmes that are supported by Cohesion Policy through European Structural & Investment Funds . A designated managing authority provides information on the programmes, selects projects and monitors implementation.
Access to finance
This web site helps start-ups, entrepreneurs and companies of any size or sector to apply for loans and venture capital supported by the European Union.
Investment in innovation
– Horizon 2020
Through its Industrial leadership pillar , the programme provides financial support for industrial research and innovation
– Connecting Europe Facility (CEF)
CEF is a key EU funding instrument to promote growth, jobs and competitiveness through targeted infrastructure investment at European level. It supports also the EU digital economy