Transcript European champions vs. National Champions

EU POLICY-MAKING, THE SINGLE MARKET
AND EUROPEAN CHAMPIONS:
TOWARDS A TAXONOMY
Franco Mosconi
Università di Parma, Jean Monnet Chair in The Economics
of European Industry,
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Related literature:
the rationale for Supranational champions
•Seabright [2005] and his assessment of the «Airbus experience»: that it
has been «a rather special case whose applicability to other project and
sectors is fairly limited» due to the technological characteristics of the
aerospace sector.
•Sutton (1998, 2006) in some cases and sectors too low a concentration
level cannot be an equilibrium or optimal solution and, despite an increase
in the size of the market, the degree of concentration may remain far from
zero
•Gordon (1999) focuses on ICT as the engine for the growth of productivity
in the US in early and mid 90s, where large shares of GDP are invested in
R&D
•Pisani-Ferry and Sapir (2006) The “Lisbon Strategy” aims at replicating this
phenomenon to the EU
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Related literature:
the rationale for industrial policies
•Jacquemin (1987): «there is a whole tide of research questioning
whether the market alone can efficiently accomplish selections leading to
new industrial organisations»
•Rodrik (2004): «strategic cooperation between the private and the public
sectors» …
•Labory and Bianchi (2006): «Old-style industrial policies whereby the
government directly intervened in markets, and was often the producer
itself are no longer relevant. Structural changes occurring in economies –
summarized in the term “globalization” – are triggering the definition and
implementation of new industrial policies».
•Krugman (1986) and his New Trade Theory suggest that for:
Strategic sectors
•Sectors with increasing returns to scale
•Policies can help in building a competitive advantage
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The problem at issue
European Champions
products of a competitive market
vs.
National Champions
products of Goverments’
“picking the winners” policy
type I: the Airbus model
supranational cooperation and concerted public policy support for
the development of technology in “strategic sectors”.
Can the Airbus experience be replicated?
type II: the “single market” model
result of consecutives mergers and acquisitions waves driven by the
market
How to enhance the emergence of this type of European Champions?
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The European industrial policy: a bit of history
1970s and 1980s: political and social goals
• direct aid to certain industrial sector (e.g., the steel industry)
or specific firms
• “picking the winners” policy
1990s: new industrial policy approach (Bangemann Comm.)
• to create condition to thrive and develop, for all business
• “level playing fields” approach
2002 - 2005: re-emphasis to specific sectoral applications
• joint consolidation of horizontal basis and vertical
applications
70s / 80s
90s
parading shift
2002
partially back
why ?
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Concerns about productivity and growth
• not only US ahead in sectors that have the highest
value added per head (especially, computers,
semiconductors and the telecommunication
equipment sectors)
• but also deterioration in the EU relative position
compared to the early 80s
because of
• insufficient innovative activity
• insufficient R&D activity
• weak diffusion of ICT
weakness in the elements that foster economic
growth and productivity growth
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A new integrated industrial policy
Whilst all policies are important, some have greater importance for some sectors than
others (COM(2005)474, final, pp. 3-4)
Cross-sectoral initiatives
New sector-specific initiatives
(1) An Intellectual Property Rights and
Counterfeiting Initiative (2006)
(1) The Pharmaceuticals Forum (2006)
(2) High Level Group on Competitiveness,
Energy, and the Environment (2005)
(2) Mid-Term Review of Life
Biotechnology Strategy (2006-2007)
(3)
External Aspects of Competitiveness
and Market Access (2006)
(3) New High Level Group on the Chemicals Industry
(2007) and the Defence Industry
(4)
New
Legislative
Programme (2005)
(4) European Space Programme
Simplification
(5) Improving Sectoral Skills (2006)
(6) Managing Structural
Manufacturing (2005)
Change
Sciences
and
(5) Taskforce on ICT Competitiveness (2005/2006)
in
(7)
An Integrated European Approach to
Industrial Research and Innovation (2005)
(6)
Mechanical
(2005/2006)
Engineering
Policy
Dialogue
(7)
A series of competitiveness studies, including
studies on ICT, food, fashion and design industries
Source: EC, “Implementing the Community Lisbon Programme: A Policy Framework to Strengthen EU Manufacturing –
Towards a More Integrated Approach for Industrial Policy”, COM(2005)474 final
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The European Industrial Policy “Triangle”
European Champions in the high technology sectors 
from
to
Subject to:
• supranational public and private cooperation in research and
innovation
• respect of the single market regime
bearing in mind:
• consistency between industrial policy and competition policy
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What is required?
a European “technology policy”
Tools (two categories that overlap):
• tools that facilitate communication and cooperation among
stakeholders, and that provide general institutional support
– European Technology Platforms (ETPs)
– European Research Area (ERA)
• tools that provide financial support and incentives for
technology and innovation
– 7th Framework Programme for Research, Technological
Development and Demonstration Activities (FP7); around 52,2 bls
for the period 2007-2013
– Joint Technology Initiatives (JTIs)
Can these policy and tools help to replicate the Airbus
experience?
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How to proceed?
Refocus the European technology policy
Step 1: concentrate efforts on those sectors where:
• “strategic cooperation between the private and the public
sectors” is likely to emerge
• mergers and clusters can lead to a better exploitation of
economies of scale without limiting competition
(“productive efficiency argument”)
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How to proceed?
Refocus the European technology policy
Step 2: care of the level playing field (i.e., the single market)
• Europe has 27,4% of the world leading 500 companies,
and dominates in the banking sector, but …
• It trails badly in two key sectors: high-tech and life
sciences
• Its share in the “triad” GDP is 44%
There are margins for the growth of a more
market-oriented variety of capitalism
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The reshaping of the European market structure
EC type II: mergers and acquisitions of a cross-border nature
– In 2006, EU M&As worth $1,59 trillion, and since 2004 the value has
almost tripled
– Deals are getting bigger: in the first quarter of 2006 nine deals valued
at more that $10 billion (as many as during 2002-2004)
– Sector concerned: utilities and energy; telecommunications, defence;
banks and other financial firms; pharmaceuticals and biotech …
– … consistent with the sectors qualified as crucial by the Commission,
and with those appearing from different rankings of top companies
(e.g., FT, Fortune)
– “Horizontal integrations” in order to exploit synergies
– Transatlantic alliances are also in place
– Role of the “Enlarged Europe”
– Banks as European Champions type III ?
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Summing up …..
European Champions type I
European Champions type II
European Champions type III ?
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Thank you for your attention !
E-mail: [email protected]
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