The State and structural policies

‭The State and structural policies‬ ‭ ) Industrial policy (IP):‬ 1 ‭Industry = polysemous term which represents economic activities which combine factors‬ ‭of Y to produce material goods intended for the market, which involves the transformation‬ ‭of matprem. We generally distinguish between extraction industries and the‬ ‭manufacturing industry.‬ ‭ -‬‭Justifications and developments in industrial policy:‬ 1 ‭a)‬ ‭The justifications for industrial policy:‬ ‭The economic foundations of an industrial‬ ‭policy:‬‭Jean Tirole‬‭,‭E ‬ conomy of‬‭the common‬ ‭good‬‭, Chapter 13,‬‭2016‬‭:‬ ‭Industrial policy‬‭=targeting of public aid favoring‬‭certain sectors, certain technologies or even‬ ‭certain E. We‬ ‭can use the notion of industrial policy in the sense of favoring small E, or targeting sectors.‬ ‭ n industrial policy must come from a market failure (otherwise no interest).‬ A ‭The rationalities that can be implemented in the development of an industrial policy include:‬ ‭-‬‭The difficulty of financing small and medium-sized‬‭businesses‬‭E (because the financial system‬ ‭lacks information on the latter). Creation of the BPI in 2013 - €20 billion of capital to finance VSEs,‬ ‭SMEs and ETIs.‬ ‭It must particularly support I in the strategic sectors of the future (digital & renewable energies)‬ ‭-‬‭Lack of R&D in the private sector‬‭(because imperfect‬‭appropriability of its returns by the one‬ ‭who incurs the R&D expenses)‬ ‭-‬‭Lack of coordination between complementary actors‬‭in‬‭order to create a geographical‬ ‭environment (cluster) or an industrial sector.‬ ‭ he driving role of industry justifies a dedicated policy:‬ T ‭Pk helps industry while it occupies a minority and decreasing place in the economy of many PDEM?‬ ‭-‬‭Training effects for‬‭all sectors of activity:‬‭production‬‭gains growing‬‭much more important‬ ‭than agricultural and tertiary. Also, she is provider‬‭of lots of employment direct‬‭, but also‬ ‭indirect, and it raining a lot of effect on economies (illus° of unemployed but its importance in‬ ‭employment remains the same).‬‭Each euro of automobile‬‭production leads to an increase of‬ ‭4.5€ in overall VA, compared to 2 for other sectors.‬ ‭-Industry = 75% of R&D efforts in France. The resulting innovations permeate the entire productive‬ ‭fabric. And 75% of the X‬ ‭of B&S Français are undue products.‬ ‭-See‬‭CAE‬‭:‭N ‬ o industry, no future‬‭(‬‭2013‬‭).‬ ‭ )‬‭The different approaches to industrial policy:‬ b ‭Industrial policy: vertical approach and horizontal approach:‬ ‭Vertical‬ ‭approach‬‭=select‬ ‭sectors,‬ ‭E‬ ‭or‬ ‭areas‬ ‭that‬ ‭benefit‬ ‭from‬ ‭support‬ ‭from‬ ‭public‬ ‭authorities.‬ ‭Historically,‬ ‭this‬ ‭is‬‭the‬‭path‬‭that‬‭has‬‭been‬‭chosen‬‭by‬‭countries‬‭to‬‭create‬‭“national‬‭champions”,‬‭to‬ ‭ensure national independence or to protect declining activities.‬ ‭Horizontal approach‬‭=act on a global environment of‬‭E through actions relating to the design and‬ ‭attractiveness of the territory (research infrastructure, incentives promoting innovation) to strengthen‬ ‭the competitiveness of the industrial productive system.‬ ‭ ince the 70s, industrial policies have moved from vertical to horizontal: Europe - horizontal type‬ S ‭state aid = 50% in the mid-90s compared to 85% in 2009.‬ ‭This is because by‬‭getting closer to the technological‬‭frontier, the State is – as well as the‬ ‭market – able to select promising sectors of the future.‬ ‭ ean Tirole‬‭,‬‭Economy of the common good‬‭, Chapter 13,‬‭2016‬‭:‬ J ‭The problem with selective IP is that it is a blind approach - lack of information from politicians.‬ ‭State has no particular skills to detect sectors and activities of the future - States not predisposed‬ ‭to choose winners.‬ ‭ x: Huge sums spent on tq Thomson projects to compete with Apple ds 1 computer half of the 80s‬ E ‭= failure.‬ ‭- +easy to do IP after G because it was reconstruction and catching up. We had infrastructure with‬ ‭mastered technology, where social D was well understood (transport, electricity, etc.).‬ ‭On the other hand, the current structuring industries such as digital, biotechno and nanotechno‬ ‭no longer meet the same criteria.‬ -‭ Also, whether public or private, tech bets are risky. It is important to recognize your mistakes and‬ ‭not continue to support projects that have proven to be unpromising. However, governments‬ ‭often give in to the attempt to resolve problems with large amounts of funding - very hard to stop‬ ‭public initiatives.‬ I‭ndustrial policy in France since 30G:‬ ‭30G: industrial voluntarism - indicative planning (Monnet Plan 1946) and nationalization of‬ ‭numerous E of particular networks (Air France 1945). - Vertical PI.‬ ‭ 0s and 70s = peak of IP - creation of national champions in each sector capable of confronting‬ 6 ‭global competition. State intervention focused on dvlp of large nuclear, aeronautics, railway projects‬ ‭etc.‬ ‭To do this, the public authorities promote industrial concentration, use offensive protectionism,‬ ‭prefinance the industrial dvlp and open up outlets through public orders. - Vertical approach.‬ ‭-Catch-up context – This is the “‬‭high tech colbertism‬‭»of‬‭Elie‬‭Cohen‬‭,‭1 ‬ 992‬‭(link with‬ ‭Gerschenkron?):‬ ‭-‬‭Purchase of foreign technology / appropriation of‬‭acquired technology then upscaling /‬ ‭national equipment plans / offensive protectionism / local price premiums accepted for‬ ‭dumping abroad.‬ ‭-That's what the Chinese do.‬ ‭ arly 80s - left coming to power - nationalization of industrial banks whose objective is to guide‬ E ‭undue choices more easily and to come to the aid of E in difficulty.‬ ‭-Relative failure of this strategy + constraints imposed by the EU = end of this undue voluntarism.‬ ‭-Ordo-liberal criticism wins‬ -‭ ‬‭However, the phenomenon of deindustrialization, in‬‭Europe in particular, as well as the serious‬ ‭consequences it could have (see role of industry + above) seems to once again legitimize vertical‬ ‭policy, especially since China and the US do not play the game. However, we need a responsible‬ ‭vertical IP (not the same thing as 30G because not the same context).‬ ‭Ex: All ordo-liberals must reconsider IP because of the threat to automobile batteries -‬ ‭Volkswagen announced 6k new jobs by 2023 - We buy batteries from China, we have lost the‬ ‭industrial heart of Europe!!‬ ‭ o what to do now? :‬ S ‭Jean Tirole‬‭,‬‭Economy of the common good‬‭, Chapter 13,‬‭2016‬‭:‬ ‭Rodrik and Stiglitz at the Toulouse School of Economics in 2014: like it or not, governments will‬ ‭continue to do IP. Tirole then deduces 7 criteria necessary to set up an IP:‬ ‭1)‬ ‭Respond to a market dysfunction (this is the case because the US and China are not playing‬ ‭the game).‬ ‭2)‬ ‭Must rely on independent expertise (because the EU is not necessarily qualified to know‬ ‭which E to support)‬