An Activist Industrial Policy for Europe?

Is Europe again flirting with an activist industrial policy as model for increased competitiveness? Events in the last few years suggest that the trend towards a non-interventionist industrial policy may have come to a halt. The financial crisis of 2008-09 and the severe recession that followed prompted governments to give financial support to industries. These interventions, in response to exceptional events, seemed to indicate a greater willingness on the part of governments to support industries that were deemed to be too important to fail. Will this trend continue – and what can new efforts to design industrial policies learn from Europe’s past experience in that field? In a new ECIPE Occasional Paper, Sir Geoffrey Owen presents a new study on European industrial policy. He talks about ways to define the government’s role, and the balance between horizontal and sectoral policies. His aim is to identify successes as well as failures, drawing on European as well as American and Japanese experience, and to present some conclusions about what policies are likely to be effective in current circumstances.


In Focus

China's Challenges: Can it Reform its Economic and Political System?

The global economic crisis has changed the perception that many Western countries shared on China. In his new paper, China's Challenges, Guy de Jonquières concludes that the country is no longer viewed as an unruly and disruptive pupil, but rather a potential financial paymaster. He identifies and describes the challenges that China is facing in its new role. The paper argues that Chinese developments in three areas – economy, foreign policy and openness for public debate – are imposing increasing strains on the country’s political system and institutions, and demand new approaches both inside and outside the country. Guy de Jonquières concludes that the future for China is still uncertain due to the much vulnerability in economic, domestic and foreign policy. And he recommends Western countries to engage with China as much as is possible without conceding on essential principles. 

 

European Vertigo – Remedying the Eurozone Crisis

Will the result of the crisis summit in Brussels be enough to calm European bond markets and avoid the possibility of a Eurozone breakup? In a new Briefing Note, Fredrik Erixon takes stock of thecrisis and previous crisis packages – and outlines an agenda for what need to happen now for the Eurozone to survive. The key thing, argues Erixon, is todress up the Euro bride as best as possible to make her attractive for courtship from the ECB and the IMF. It is no longer in the power of EU governments to solve the crisis by fiscal policy – greater assistance from the ECB and the IMF will be needed.

 

The Eurozone Crisis - A Crisis of the Sovereign

The Eurozone crisis is no longer only a sovereign debt crisis - it is a crisis of the sovereign, or a crisis of the state and state authority. Eurozone leaders no longer commands necessary authority to convince a increasingly sceptic market about their crisis-fighting credentials. Yet the problem extends beyond the current crisis, argues Fredrik Erixon in a new essay, and concerns increasing mistrust in the strategy to supplant national governments by pan-European governance. Eurozone leaders can still recover their authority to fight the crisis, but the longer they have waited the more they have raised the bar for what markets demand and what they need their electorates to accept.

 

Free flow of information - for free trade or human rights?

Hosuk Lee-Makiyama discussed censorship and other new trade barriers that threaten the digital economy at an ECIPE seminar on November 15th and at the WTO Public Forum on September 21. Lee-Makiyama has called for a new plurilateral agreement that encompass both products and online services as outlined in his proposal for an International Digital Economy Agreement. ECIPE also hosted a lecture by Frank La Rue, UN Special Rapporteur on Free Expression and Opinion. La Rue’s report on online freedoms has received broad support, including the Dutch and Swedish Foreign Ministers Uri Rosenthal and Carl Bildt speaking at an ECIPE event the summer. La Rue and leading MEPs debated Internet access and human rights issues, a discussion that echoes the digital authoritarianism dilemma addressed in a recent paper by Fredrik Erixon and Hosuk Lee-Makiyama, and internet censorship as used for online protectionism.

 

What is Driving Healthcare Expenditures to Rise?

The last 40 years have seen a rapid increase of healthcare expenditures. Increas­ing healthcare expenditures form a significant part of these outlays, and its share of total government expenditure has risen rapidly. The next 40 years is likely to witness an even faster expansion of healthcare expenditures in many European countries. In a new study, Fredrik Erixon and Erik van der Marel examine cost drivers in European healthcare systems and conclude supply-side inefficiencies is a central problem. Low or falling productivity pushes up the real cost of healthcare and the healthcare sector will have to be reformed to improve the efficiency in the use of resources. Erixon and van der Marel conclude that trade should form a central part in a new drive to gear up healthcare productivity.

 

Europe’s Energy Market and Anti-trust Action

Competition on Europe’s gas market is weak. Yet now the European Commission has started anti-trust investigations of prominent energy firms and is especially interested in their contractual relations with subsidiaries. A group of ECIPE scholars arrived to similar conclusions in a study presented last year. The called for systematic anti-trust investigations into the pricing and contractual models of especially Gazprom and its affiliates in the Eastern part of Europe. The study concluded that more competition, not less, in the EU’s gas markets is required to achieve a Single Market and to therefore reduce Europe’s vulnerability to gas supply cuts originating in Russia.

 

Ideas for New Transatlantic Initiatives on Trade

The US and the EU have the capacity to play a leading role together in promoting international trade liberalisation. They remain the economic giants in the world trading system despite the growth of emerging economies. In this new ECIPE/GMF working paper, produced for the Transatlantic Task Force on Trade, Fredrik Erixon and Lisa Brandt examine the economic rationale behind different potential forms of a transatlantic free trade initiative. Possible scenarios include maintaining status quo; FTAs in goods and/or services; or plurilaterals. Ultimately, an ambitious transatlantic initiative would be beneficial both to bilateral trade and to the multilateral system as a whole.

 

News archive

Latest Publications

ECIPE Occasional Paper No. 1/2012
Industrial Policy in Europe Since the Second World War: What Has Been Learnt?
By Geoffrey Owen
Summary | Download (PDF)

ECIPE Policy Brief No. 01/2012
China's Challenges
By Guy de Jonquières
Summary | Download (PDF)

ECIPE Working Paper No. 05/2011
What is Driving the Rise in Health Care Expenditures? An Inquiry into the Nature and Causes of the Cost Disease
By Erik van der Marel, Fredrik Erixon
Summary | Download (PDF)

ECIPE Working Paper No. 04/2011
FUTURE-PROOFING WORLD TRADE IN TECHNOLOGY: Turning the WTO IT Agreement (ITA) into the International Digital Economy Agreement (IDEA)
By Hosuk Lee-Makiyama
Summary | Download (PDF)

ECIPE Policy Brief No. 01/2011
Chasing Paper Tigers – Need for caution and priorities in EU countervailing duties (CVDs)
By Hosuk Lee-Makiyama
Summary | Download (PDF)

ECIPE Occasional Paper No. 5/2011
Digital Authoritarianism: Human Rights, Geopolitics and Commerce
By Fredrik Erixon, Hosuk Lee-Makiyama
Summary | Download (PDF)

More ECIPE publications »


Upcoming Events

2012-01-31
ECIPE Lunch Seminar - China: Leviathan under challenge?
The perception on China has changed among European countries. In the event of aglobal economic crisis, the country would be seen more as a potential financial paymaster rather than disruptive pupil. Yet, there are many challenges ahead for China. Economic pressures are building up, especially in the construction and real estate sectors. Growth is certainly moderating, and some observerswarn of a hard landing for China in the next few years. China’s traditional model for growth is certainly becoming exhausted. And to these economic challenges should also be added political ones. There are increasing pressures on permitting a more open public debate. China’s role in global and regional security policy has been growing rapidly, but it is still not clear exactly what China wants to use its power for, other than securing access to raw materials. A change of such policies may not be possible without challenging the sacred principals for China’s ruling party.
Speakers: Guy de Jonquières
More information

2012-02-03
ECIPE Lunch Seminar: Regulatory divergences as trade barriers - What are the options for future trade policy on services?
Mutual recognition and harmonisation have been instrumental for regional market integration, including the Single Market. As common regulations in different economic areas deepen and become increasingly more complex, regulatory divergences between the East and West also create barriers to trade. Standards and requirements can also used as a tool for industrial policy and protectionism.
Speakers: Associate Professor Donald Kenyon, Professor Patrick Messerlin, Professor Jim Rollo, Pascal Kerneis, Roderick Abbott, Dr Lucian Cernat
More information

2012-02-15
Seminar Invitation: Launch of the Report of the Transatlantic Taskforce on Trade and Investment
In a new report, the Transatlantic Task Force on Trade and Investment presents new and ambitious initiatives for transatlantic leadership in global economic and trade policy.
Speakers: Ewa Björling, Jim Kolbe, Peter Balas, Fredrik Erixon, Bruce Stokes, Erika Mann, Patrick Messerlin, Hugo Paemen
More information

2012-02-29
ECIPE Seminar: New Ethical responsibilities of Internet Service Providers?
The exceptional development of internet in recent years has brought many benefits and new opportunities for an increasing number of people. Yet, it has also raised unprecedented moral and legal questions for both users and web sites – and the internet service providers (ISP) that connects them. Meanwhile, new threats from cyber crime have put the questions around privacy, security and monitoring at the centre stage of a lively debate.
Speakers: Professor Luciano Floridi, Robert Madelin, Professor Mireille Hildebrand, Professor Dan Burk
More information

Upcoming events

Past events


Articles, Opinion and Commentary

2011-12-28
FTAを含め、経済関係強化のための選択肢を検討−EU・米国首脳会議− (A FTA is an option for strengthening EU-US economic relations)
Japan External Trade Organization (JETRO) interviews Hosuk Lee-Makiyama on the prospects of EU-US FTA after the EU-US summit.

2011-12-17
A Crisis of the Sovereign
Fredrik Erixon on the euro crisis in the Europe's World

2011-12-17
The Eurozone Crisis
Fredrik Erixon interviewed by Greek Radio

2011-12-01
Opening up the digital economy: it is '15 years overdue'
Op-ed by Hosuk Lee-Makiyama on trade and digital economy in Public Service Europe

2011-11-27
Trade rules suited to VHS tapes in the era of cloud computing
Hosuk Lee-Makiyama provides independent comments on the Microsoft Digital Policy Blog

2011-11-27
Do EU sanctions against the likes of Syria achieve anything?
Op-ed by Natalia Macyra and Hosuk Lee-Makiyama in Public Service Europe on EU sanctions

2011-11-16
Les sanctions de l’Union européenne sont vouées à l’échec
Hosuk Lee-Makiyama explains why economic sanctions fail in Le Temps

2011-11-12
Where is the lender of last resort?
Fredrik Erixon on the eurozone crisis and Italy

2011-11-12
Future-Proofing World Trade in Technology
Journal Aussenwirtschaft, 2011, Issue III, Swiss Institute for International Economics and Applied Economic Research

More articles