Manufacturing Europe's Future. Bruegel Blueprint 21, 2 October 2013

‘Industrial policy is back!’ This is the message given in the European Commission’s October 2012 communication on industrial policy (COM (2012) 582 final), which seeks to reverse the declining role of the manufacturing industry, and increase its share of European Union GDP from about 16 percent currently to above 20 percent. Historical evidence suggests that the goal is unlikely to be achieved. Manufacturing’s share of GDP has decreased around the world over the last 30 years. Paradoxically, this relative decline has been a reflection of manufacturing’s strength. Higher productivity growth in manufacturing than in the economy overall resulted in relative decline. A strategy to reverse this trend and move to an industrial share of above 20 percent might therefore risk undermining the original strength of industry – higher productivity growth. This Blueprint therefore takes a different approach. It starts by looking in depth into the manufacturing sector and how it is developing. It emphasises the extent to which European industry has become integrated with other parts of the economy, in particular with the increasingly specialised services sector, and how both sectors depend on each other. It convincingly argues that industrial activity is increasingly spread through global value chains. As a result, employment in the sector has increasingly become highly skilled, while those parts of production for which high skill levels are not needed have been shifted to regions with lower labour costs.

Antitrust risk in EU manufacturing: A sector-level ranking. Bruegel Working Paper 2014/07, July 2014

The object of this paper is twofold: to provide a broad descriptive analysis of the risk of collusive behaviour throughout Europe in the manufacturing sector; and to identify those manufacturing sectors in which the European Commission has been more active in the past in its capacity of antitrust authority.

How did Targeted Government Trade Policies Impact the Productivity of Manufacturing Firms in Eastern Europe and Central Asia between 1995 and 2009? ACES Working Papers, 28 August 2012

This study investigates whether trade-related, targeted, government policies had an impact on the total factor productivity (TFP) of manufacturing firms in Eastern Europe and Central Asia (ECA region) between 1995 and 2009. It does so by looking at how different types of primarily industry-specific trade policies (or their combinations) impacted firm productivity. The dependent variable is firm total factor productivity (TFP), calculated using the Levinsohn-Petrin approach. As an alternative measure of firm productivity, this study uses labor productivity. This study finds that, in most instances (10 out of 14 times), targeted policies do not show a significant impact on manufacturing firms’ TFP. Based on the analysis of 588 manufacturing firms in the ECA region, this study finds that, contrary to proponents of targeted policies, targeted trade-related government policies have a limited impact on the total factor productivity (TFP) in developing countries.