Why has Europe so often lagged behind its competitors in industrial development? And what can be done about it? For Alcide De Gasperi fellow Dimitri Zurstrassen, these historical and policy-related questions lie at the heart of his research on the evolution of European financing instruments for industrial policy from the 1970s to the 1990s, and on what this history can tell us about today’s industrial policy challenges.
Part of this research is the project he recently carried out at the Historical Archives of the European Union in Florence with the support of a European Court of Auditors Research Grant. "The Evolution of EU Financing Instruments for Industrial Policy in Response to US and Japanese Competition (1970s–1990s): Lessons for Contemporary Challenges" examines a period when European countries were facing growing competition from the United States and Japan, while the European Community itself had few policy instruments with which to respond.
“I was very interested in European integration history, but also in industrial policy. So I tried to connect the two, which led me to the financing instruments used to support industrial policy,” Dimitri explains.
His starting point was a clear dichotomy: while the European Coal and Steel Community had been given substantial powers to intervene in the coal and steel sectors, the Treaty of Rome provided no comparable European-level instruments for other industries. Industrial policy remained largely in the hands of national governments, which supported their own companies and national champions. The same was true of research policy, “you saw a duplication of projects, and no real planning started at European level,” he said.
Crisis as a driver of change
The economic difficulties of the 1970s and mounting international competition eventually pushed the European Community and its member states towards the adoption of Community-wide instruments. The European Commission began developing new ways to support industrial competitiveness, including financial and research instruments – such as the New Community Instrument (1978) and the ESPRIT programme, which was aimed at emerging technologies.
Those instruments, however, were largely built around sectoral strategies, an approach that would later fall out of favour. The 1990s saw a shift away from targeted financial intervention in individual sectors towards a more horizontal approach to industrial policy, under Commissioner for the Internal Market and Industrial Affairs Martin Bangemann. At the same time, the European Community began to pay greater attention to small and medium-sized enterprises (SMEs), which had been largely overlooked at European level during the 1970s and 1980s.
One of the project's key findings concerns an institution whose role changed significantly over this period: the European Investment Bank (EIB). Established under the Treaty of Rome primarily as an instrument for regional development and cohesion, the EIB increasingly supported advanced technologies from the early 1980s onwards. Its annual reports document financing for microelectronics, information technology, telecommunications and pharmaceuticals. “The archival documents give me the numbers,” he explains, “You can see where the support is going and when it disappears.”
Why industrial policy evaluation matters
For Dimitri, one lesson from the historical record—and a vital tool for policy-making—is the importance of evaluation. “When you have an ambitious industrial policy, you need to evaluate it,” he says.
The project therefore looks not only at how European industrial policy developed, but also at how institutions learned to assess and adapt it.
Here, the ECA archives have proved especially informative. In the 1980s, the Court began to evaluate aspects of industrial policy, although, as he points out, a strong evaluation culture had yet to develop. “The European Court of Auditors archive were really, really useful,” he says, pointing to the Court’s annual and special reports as a way of assessing its capacity to evaluate industrial policy at the time.
In the 1990s and 2000s, however, the vocabulary shifted away from industrial policy to a towards innovation and horizontal competitiveness. “We didn’t want to talk about industrial policy: it was all about innovation policy, competition policy, and horizontal competitiveness.”
With industrial policy now back on the EU’s agenda, albeit with different objectives, including decarbonisation and economic security, the question of evaluation is relevant again. “We really have to evaluate all the current initiatives, to see which technologies and which sectors are best to support, to have intelligent industrial targeting and avoid market failures and also to address the problem of competition between different national industries and member states.”
For him, the historical experience offers a useful point of comparison. “We need to reinforce these evaluation methods of industrial strategy […] with the data.”
The ECA holdings, alongside those of the Commission and other institutions, provide precisely that evidence, allowing him to trace not only the ambitions behind European industrial policy, but also how its priorities and instruments evolved.
Dr Dimitri Zurstrassen is a visiting fellow at the Alcide De Gasperi Centre at the European University Institute. He is also a policy analyst and lecturer at the LUISS Research Centre for European Analysis and Policy, in Rome, Italy.