Vincent Aussilloux is director of the economy department of France Stratégie. He is the co-author of a study on “ Industrial policies in France », In November 2020.
Can we have a competitive economy without a strong industry?
If we define industry in its traditional perimeter, which corresponds to the production of goods, yes there are efficient economies in which the manufacturing sector has weakened considerably. This is, for example, the case of the United States where the share of industry in the economy has fallen significantly even though it remains higher than France.
But unlike France, the United States has developed productive activities that are not traditionally included in industry, in particular the entire digital sector apart from the production of materials and equipment. The United States has been able to develop a whole platform economy, in particular the Gafam [Google, Apple, Facebook, Amazon, Microsoft], which strongly drove American growth and widened the gap with living standards in Europe (+ 50% compared to France in current GDP per capita).
Apart from countries that are highly endowed with natural resources, there are few that manage to have high and growing living standards without a strong industry or, at least like the United States, without a very integrated service sector in the economy. ‘international economy. Some countries have specialized in international financial services such as the United Kingdom, Luxembourg or Hong Kong, but we know the limits and the risks of an economy that relies too much on finance.
How is an economy based on industry stronger?
Industry is the driver of productivity gains, which are the main source of rising living standards, quality jobs spread across the territory and innovation. It accounts for more than 70% of private spending on research and development [R&D] of the country, while it only accounts for 10% of total employment and 13% of GDP.
In addition, a trade deficit like France’s in the manufacturing sector generates a significant job deficit, even though the country has a structurally high unemployment rate.
Conversely, what are the risks associated with deindustrialisation?
In France, the regions most affected by deindustrialization in recent decades, particularly in part of the Grand-Est, have lost a lot of jobs, which has strongly affected living standards and the economic dynamism of these territories. Deindustrialization, which has not been offset by a sufficient boom in high value-added services, therefore has profound economic, social and political consequences.
You have 12.48% of this article left to read. The rest is for subscribers only.