Towards Sustainable Industrial
Competitiveness Policy
Issues paper to EU Ministers of Industry,
Louvain-la-Neuve, Belgium, 14th July 2010
Background and purpose
• The economic crisis should serve as a “wake-up call” for the
EU - emphasising the need to come to grips with
transformation
• The Europe 2020 Strategy calls for the development of
policies “to deliver smart, sustainable and inclusive growth”
• The Competitiveness Council of March 2010 calls for a
renewed industrial policy with a focus on sustainability, ecoefficiency, and innovation
• The purpose of the issues papers: a broader reflection on the
longer term implications of combining ‘sustainable
development’ with ‘industrial competitiveness policy’
• Two cases: “SMEs, Growth and Innovation” and
“Transfomation and the Resource-intensive Industries”
General industry challenges
• Value chains are increasingly complex and intertwined, within
and across sectors
• Industrial sectors can no longer be treated as homogenous,
independent and national
• Competitiveness builds upon existing assets – often more
than jumping upon current technology ‘bandwagons’
• Emerging economies are increasingly positioning themselves
in ‘high-tech’ sectors – the crisis has reinforced this trend
• Unforeseen and sudden shifts in relative competitiveness are
likely to increase in the future
• Addressing energy and environmental challenges
Sustainable Industrial Competitiveness
Framework
Implications for future industrial policy
• Industrial policy may require a finer level of resolution than
simply sectors
• Generic policies should be combined with targeted policies
(instead of horizontal versus sectoral policy mixes)
• Anticipation of potential future developments is crucial for
policy development
• Stability, predictability and transparency of regulatory
conditions are important for promoting competitiveness
• Multi-dimensional policy governance frameworks should be
developed and/or strengthened
Sustainable Industrial Competitiveness
Policy Framework
Case 1: SMEs, Innovation and Growth
General industry challenges for Innovative SMEs
• Significance of highly innovative, high-growth SMEs for
economic growth and industrial transformation
• More young, innovative companies are needed to support the
transformation to a greener, sustainable economy
• Specific constrains on SME innovation: limited access to
finance, appropriation of benefits from R&D, lack of
absorption capacity (limiting diffusion of innovation)
• Particular constraints on the growth of innovative SMEs:
market fragmentation (lack of standards), market access
barriers and access to (venture) capital
Implications for future industrial policy
• Small Business Act as a good example; a need for a specific
‘SBA for Innovation’ as part of a reviewed Act
• Generic policies towards SMEs to be combined with targeted
policies towards sub-sets of SMEs
• Innovative clusters as an element of response – and reinforce
their international and EU dimension (vertical coordination)
• Address the limited access to finance
• Strengthen demand-driven policies and better connect them
so supply-driven policy tools
• Multi-level governance as part of a new framework for
policies towards SMEs (Strategic Innovation partnerships)
Case 2: Transformation and the
Resource-intensive Industries
General industry challenges for the
Resource-intensive industries
•
EU’s resource-intensive industries have implemented extensive
restructuring measures
•
The economic crisis resulted in a strong decrease in demand.
Future growth is expected to be driven by demand in emerging
markets
•
Exposure to global competition is increasing: both import growth and
reduced share of EU in global outputs
•
Commodity and energy prices fluctuate strongly: a rollercoaster
•
Global energy prices: no level playing field due to energy price
subsidies in non-OECD countries ($ 557 billion in 2008)
•
Continued access to both energy and natural resources no longer
secured – strategic stockpiling as an increasingly common practice
Impacts of these challenges on the EU’s
Resource-intensive industries
• Higher prices will reduce competitiveness both in domestic
and in export markets
• Serious implications for other downstream EU industries in
the value chain – more reliant on imported inputs and
reducing intra-industry synergies and innovation
• Adverse global environmental impacts from shifts to non-EU
based production expected
• Industry has a key role to play: three transformation
strategies:
- Process innovation
- Moving to ‘up-market’ segments
- Increase presence in growth markets
Implications for future industrial policy:
provide a long-term framework:
1)
Short-term mitigation policies to respond to temporary
shocks (e.g. short term work arrangements)
2)
Market-regulation measures (EU-level) – including energy
efficiency, environmental impact and trade – focus on
demand-side
3)
Coordination measures and action plans (also at global
level)
4)
Capacity building and investment measures – including
education and training (national and regional levels)
Finally: a Sustainable Industrial
Competitiveness Policy needs to:
1.
Be based on real challenges and issues for industry, anticipate and
support transformation towards a green, global economy
2.
Provide a long-term framework that allows and supports such
transformation and the necessary investment
3.
Be holistic and integrated and apply various policy strands, both
generic and specific
4.
Reinforce demand-side policies, especially when supporting the
market uptake of innovations
5.
Provide Coherence, coordination and integration – towards multilevel governance
6.
Importance of expanding impact assessments at all levels
Thank you for your attention
Jan Maarten de Vet <janmaarten.devet@ecorys.com
Paul Baker <baker.paul.s@gmail.com>
Vincent Duchêne <vincent.duchene@ideaconsult.be