LThe report’s order to Mario Draghi focused on Europe’s loss of competitiveness. Noting that this decline is the major cause of stagnant incomes, it carefully documents Europe’s growing lag in innovation, not only vis-à-vis the United States, but also China. The reasons it presents are largely consensual: a weak investment effort in technological research and an ineffective mobilization of Europeans’ savings. The diagnosis points to the long-standing dominance of large companies far removed from transformative innovations, a red tape that discourages risk-taking, and fragmented financial markets that push the most energetic creators to cross the Atlantic.
This cruel reminder of our weaknesses would be less depressing if Draghi offered well-adapted solutions. Although he is full of ideas, the heart of his report is to propose a common industrial policy, which would take charge of innovation, but also the decarbonization and securing of our economies. The report estimates the cost of the operation at 800 billion per year, or 4% of European GDP. When we know that, for years, the Commission budget has been frozen at 1%, it is clear that the 800 billion should mainly take the form of transfers of skills from the Member States to the Commission. The ambition is impressive, but unattainable. Its major weakness is to propose prescriptions disconnected from the diagnosis.
This diagnosis is based in particular on the observation that, since the beginning of the century, technological investments in Europe have been dominated by the automobile sector, while in the United States, companies linked to digitalization have taken over. This specialization in medium-tech sectors is debilitating because the possibilities for transformative innovations are low. This domination is built on an old fabric of relations between large companies and large banks, which contrasts with the fluidity and responsiveness of the financial markets, which remain undersized in Europe. Europe is therefore not suffering from a lack of skills or financial means, but from a poor use of its resources.
One might therefore expect the report to propose a strategy of deregulation, reduction of public aid, explicit and implicit, which perpetuates the domination of ageing industries, and the rapid adoption of the capital market union, blocked for ten years by private interests. Of course, all this is mentioned, but it is not clear what use a European industrial policy can be.
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Source: Lemonde
