Towards a New Industrial Policy for Europe. EPC Issue Paper No. 78, November 2014

An ambitious rhetoric has been adopted both at the European and national level towards industrial policy. Along with rhetoric, sweeping action plans to revive our industrial base and reverse off-shoring trends have been attempted. However, concrete measures undertaken have been inconsistent and weak compared to the magnitude of the challenges faced by European manufacturing as well as the policies implemented by our competitors. At the same time the economic and financial crisis has shed light on the risks of an excessive reliance on the service and financial sector and the necessity to look for new sources of growth. As a response, this Issue Paper, by Claire Dhéret, Senior Policy Analyst and Martina Morosi, Programme Assistant, argues that fostering a more innovative, knowledge-intensive, new technology-oriented and resource-efficient manufacturing industry in Europe is the right way to go. To this end, a new EU strategic vision on industrial policy, based on the operationalisation of European cooperation, is urgently required. The paper presents a toolkit for implementing the vision and a series of policy recommendations.

Analysing the Contribution of Business Services to European Economic Growth. Bruges European Economic Research (BEER) Papers 9/February 2007

The sector business services contributes directly and indirectly to aggregate economic growth in Europe. The direct contribution comes from the sector’s own dynamism. Though the business-services industry appears to be characterised by strong cyclical volatility, there was also a strong structural growth. Business services actually generated more than half of total net employment growth in the European Union since the second half of the 1990s. Apart from this direct growth contribution, the sector also contributed in an indirect way to economic growth by generating knowledge and productivity spill-overs for other industries. The knowledge role of business services is reflected in its employment characteristics. The business-services industry created spill-overs in three ways: original innovations, knowledge diffusion, and the reduction of human capital indivisibilities at firm level. The share of knowledge-intensive business services in the intermediate inputs of the total economy has risen sharply in the last decade. Firm-level scale diseconomies with regard to knowledge and skill inputs are reduced by external deliveries of such inputs, thereby exploiting positive external scale economies. The process goes along with an increasingly complex social division of labour between economic sectors. The European business-services industry itself is characterised by a relatively weak productivity growth. Does this contribute to growth stagnation tendencies à la the socalled “Baumol disease”? The paper argues that there is no reason to expect this as long as the productivity and growth spill-overs from business services to other sectors are large enough. Finally, the paper concludes by suggesting several policy elements that could boost the role of business services in European economic growth. This might to achieve some of the ambitious Lisbon goals with respect to employment, productivity and innovation.

The world innovation landscape: Asia rising? Bruegel Policy Contribution 2013/02, February 2013

Highlights • Research and development spending has risen rapidly in Asia, particularly in China, which is now the world’s second R&D spender behind the United States.The increase in Korean and Chinese patent applications has been even more rapid, but Chinese patenting for exploitation on the main markets for innovation(the European Union, Japan and the US) is still marginal. • Asia's increased innovation spending is most prominently related to information and communication technologies. Overall, the Chinese and Korean economies are still not specialised in knowledge-intensive goods and services.Furthermore, China in particular is not (so far) capturing much value from its role as a manufacturer and exporter of high-tech goods; China remains mostly an assembler of goods, the value of which is created elsewhere. • It would be wrong to ignore China's innovation potential on the basis of its current performance. Its clear innovation ambitions are likely to drive its future growth. • Europe is struggling much more than the US to retain its place at the global innovation table. The EU should use Asia’s capacity building in innovation as an opportunity for value capture.

European Energy and Industrial Policy Realigned: Risk or Opportunity for EU Eco-Innovation Strategy? IES Policy Brief Issue 2014/03/February 2014

Summary. Europe’s eco-innovation strategy fuses industrial, energy and environmental policy together in a concept for sustainable economic growth in the 21st century. The latest debate about high energy prices and their impact on energy-intensive industry shows, however, that the emphasis among the three policies has shifted over the years. Some adjustments are therefore necessary in order to reduce evolving inconsistencies. This Policy Brief describes the different dimensions of the EU’s industrial policy, and assesses the options available to policy-makers to increase the competitiveness of energy-intensive sectors without compromising the eco-innovation and sustainability agenda. If several key principles of the European sustainability agenda remain unchanged, strategic development is possible.

Offshoring of Information-intensive Services: Structural Breaks in Industry Life Cycles. ACES Working Papers, August 2010

The emergence of widespread offshoring of information-intensive services is arguably one of the more impactful phenomena to transform business in the last ten years. A growing body of research has examined the firm-level drivers andlocation factors (i.e., the why's and where's) of services offshoring. However, little empirical research has examined the maturation sequencing (or when's) of services offshoring. Adopting industry life cycle theory as a framework, the key research questions examined in the paper are: when do different categories of offshoring services provision change from being emergent sectors to more mature ones, and how does the timing of this sequence relate to the type of service offshored. Using a database of 1420 offshore services FDI projects, we find that the value-add as well as the information sensitivity of the service category are related to when the service categories progress through the industry life cycle. Implications for future waves of service offshoring are discussed.

The Composition and Drivers of Energy Prices and Costs in Energy-Intensive Industries: The Case of Ceramics, Glass and Chemicals. CEPS Special Report No. 85, 27 March 2014

In May 2013, the European Commission received a mandate from the European Council to “to present an analysis of the composition and drivers of energy prices and costs in Member States, with a particular focus on the impact on households, SMEs and energy intensive industries, and looking more widely at the EU's competitiveness vis-à-vis its global economic counterparts”. Following such mandate and in view of the preparation by the Commission of a Communication and a Staff Working Document, DG Enterprise and Industry commissioned CEPS to carry out a set of studies aimed at providing well-grounded evidence about the evolution and composition of energy prices and costs at plant level within individual industry sectors. A team of CEPS researchers conducted the research, led by Christian Egenhofer and Lorna Schrefler. Vasileios Rizos served as Project Coordinator. Other CEPS researchers contributing to the project included: Fabio Genoese, Andrea Renda, Andrei Marcu, Julian Wieczorkiewicz, Susanna Roth, Federico Infelise, Giacomo Luchetta, Lorenzo Colantoni, Wijnand Stoefs, Jacopo Timini and Felice Simonelli. In addition to an introductory report entitled “About the Study and Cross-Sectoral Analysis”, CEPS prepared five sectoral case studies: two on ceramics (wall and floor tiles and bricks and roof tiles), two on chemicals (ammonia and chlorine) and one on flat glass. Each of these six studies has been consolidated in this single volume for free downloading on the CEPS website. The specific objective was to complement information already available at macro level with a bottom-up perspective on the operating conditions that industry stakeholders need to deal with, in terms of energy prices and costs. The approach chosen was based on case studies for a selected set (sub-)sectors amongst energy-intensive industries. A standard questionnaire was circulated and respondents were sampled according to specified criteria. Data and information collected were finally presented in a structured format in order to guarantee comparability of results between the different (sub-)sectors analysed. The complete set of files can also be downloaded from the European Commission’s website: http://ec.europa.eu/enterprise/newsroom/cf/itemdetail.cfm?item_id=7238&lang=en&title=Study-on-composition-and-drivers-of-energy-prices-and-costs-in-energy-intnsive-industries The results of the studies were presented at a CEPS Conference held on February 26th along with additional evidence from other similar studies. The presentations can be downloaded at: http://www.ceps.eu/event/level-and-drivers-eu-energy-prices-energy-inten...

The Sustainability Impact of the EU Emissions Trading System on the European Industry. Bruges European Economic Policy (BEEP) Briefing 17/2007

This BEEP explains the mechanism of the EU Emissions Trading System (ETS) for the greenhouse gas carbon dioxide and explore into its likely sustainability impact on European industry. In doing so, it focuses on energy-intensive industries like cement, steel and aluminium production as well as on the emerging hydrogen economy. The BEEP concludes that at the moment it is still very inconsistently implemented and has a fairly narrow scope regarding greenhouse gases and involved sectors. It may also give an incentive to relocate for energy-intensive industries. In its current format, the EU ETS does not yet properly facilitate long term innovation dynamics such as the transition to a hydrogen economy. Nevertheless, the EU ETS is foremost a working system that – with some improvements – has the potential to become a pillar for effective and efficient climate change policy that also gives incentives for investment into climate friendly policies.

Knowledge-Bearing Elites and Industrial Performance in France and Germany. CES Germany & Europe Working Papers, No. 04.5, December 1993

Most comparative studies of public policies for competitiveness focus on the links among public agencies and industrial sectors. This paper argues that the professions---or knowledge-bearing elites-that animate these organizational links are equally significant. For public policies to promote technological advance, the visions and self-images of knowledge-bearing elites are par­ ticularly important. By examining administrative and technical elites in France and Germany in the 1980s, the paper identifies characteristics that enable these elites to implement policy in some cases, but not in others. France's "state-created" elites were well-positioned to initiate and implement large technology projects, such as digitizing the telecommunications network. Germany's state-recognized elites were, by contrast, better positioned to facilitate framework­ oriented programs that aimed at the diffusion of new technologies throughout industry. The linkages among administrative and technical elites also explain why French policymakers had difficulty adapting policy to changing circumstances over time while German policymakers managed in many cases to learn more from previous policy experiences and to adapt subsequent initiatives accordingly.