Industrial Policy of the European Community: Strategic Deficits and Regional Dilemmas

Abstract

Industrial policy of the European Community (EC) shifted in emphasis towards a neoliberal approach in the late 1980s as one part of moves towards completion of the single internal market by 1992. Intervention by national governments was also to be curtailed (in theory at least) on the grounds that it would be contrary to fair competition and free trade. There is mounting evidence, however, that European industry is increasingly falling behind its main rivals based in the USA and Japan. This poses a sharp challenge for the future of companies in certain key sectors, and for the places and regions dependent on employment in those industries. These issues of industrial strategy and regional development are explored in this paper. First, the change which took place in EC industrial policy from the limited but deliberately interventionist stance of the early 1980s to a much more strongly market-led approach by the early 1990s is outlined. The implications of such free-market measures for the energy sector, in terms of security-of-supply considerations are identified, and these measures are compared with the difficulty experienced in formulating a response to the challenge of global competition in another key sector, automobile production. The uneven regional impacts of such changes are then considered, and the inadequacy, even in its own terms, of present EC regional policy is indicated. Finally, the emergent strategic deficit in EC industrial policy, the regional dilemma associated with the ‘1992’ proposals, and the potential scope for alternative policy directions are addressed.