Industrial policies and planning in market economies Jean-Louis Truel

1. Industrialpolicies and planning in marketeconomies Jean-Louis Truel AssociateprofessorUniversity Paris Est Créteil Vice-president Cercle Kondratieff Moscow Economic Forum 24 March 2015

2. Industrialpolicies and planning : more commonthanusuallyadmitted . Industrial policies and some sort of planning have been implemented in more or less open forms in most of the developed economies

3. Industrialpolicies in the US No official planning but a huge variety of specific actions . Public research programmes, especially in defense, health, environment. Focus on fundamental research and provide a technology base that paves the way to private companies. . Public procurement policy. Well known in high tech, but covers all sectors of the economy. Provides a huge guaranteed market. . Extensive support of SME s. Programmes coordinated by the Small Business Administration . Guaranteed purchasing, specific loans, tax incentives… . Involvement of the State to specifically protect the interests of US companies. Regulatory measures, financial measures, sometimes even nationalisation.  The US have implemented global industrial policies targeted to provide a favourable environment to national companies in all industries.

4. Industrialpoliciesin Germany No industrial policies or planning at the federal leval, but Involvement of regions: shareholding (Volkswagen, Airbus Group), public purchasing, support to universities and research, organisational support… Long-term financing. Strong involvement of banks, often regional banks. “Mittlestand” : a network of mid-to large size companies that have been on the market for decades and developed a unique combination of industrial experience, process and product innovation, marketing and sales experience and strong financing. Original social model with involvement of company employees, even at the management level  provides stability and a tradition of cooperation between all parties involved

5. Comments on the French experience A long experience in industrial policies and indicative planning

6. Comments on the French experience A long experience in industrial policies and indicative planning 1945-1990 France has been a pioneer in the development of planning and industrial policies since 1945. Three pillars. . Indicative planning with appropriate organisation. . Mega projects . Support of large corporations (national champions)

7. Indicative planning in France General Planning Commissioner created in 1946. Light but influential and respected administration that defined overall growth targets for the economy and policies to reach these targets. Excellent level of economic expertise. Involvement of social forces – trade unions, industrialists… Role of specialised commissions. Independence from short-term political considerations.

8. Indicative planning in France Three functions Prospective analysis. Sharing of information on likely future trends in the field of economics, technology and social issues. Provided a common ground for all actors Facilitation of social dialogue. The discussion process in specialised commissions favoured better understanding between economic, social and political decision-makers. In several cases paved the way a consensus on major reforms. On example: innovative way of financing social security through contribution on all incomes and not only wages.

9. Indicative planning in France Results Provided a consensual framework for action in many areas: . Large infrastructure projects. . Industrial and innovation policies . Regional development Became less active after the 1973-74 oil crisis. Revival from 1981 to 1986. Ideological reasons pushed to drop indicative planning. The last real planning effort was the 10th Plan ( 1989-1992).

10. Indicative planning and industrialpolicies 1990-2005. Reducedefficiency of thesemechanisms + influence of liberalideology More economic uncertainties that made the planning exercice difficult Mega projects were less adapted to the new economic environment and did not into account SMEs Need for financing was not sufficiently delt with. Planning wasconsidered to be a rude word.

11. Indicative planning and industrialpolicies in France A revival after 2005. New forms of industrial policies. Focus on the creation of a favorable ecosystem, with structure involving all parties small and large companies, universities and research centres, State administrations, regional administrations. The best known examples are “pôles de compétitivité” (competitive clusters - полюс конкурентоспособности). 71 in France now.

12. Indicative planning and industrial policies in France полюс конкурентоспособности

13. Indicative planning and industrialpolicies in France A revival after 2005. New forms of industrial policies. Compared with the previous top-down policies this strategy allowed a better dissemination of innovation in the overall economy. Small and medium-size companies as well as start-ups are among the major beneficiaries. Another important factor is the impulse it gave to the economy of some previously de-industrialised areas.

14. Indicative planning and industrialpolicies in France Another step after 2012 : a new plannification for a new industrialisation . The role of the State is again recognised . Revival of the Commissioner for strategy and prospective studies. . Industrial projects : a more cooperative approach.

15. Indicative planning and industrialpolicies in France In September 2013 the French Ministry of Economy launched a programme of 34 industrial projects. The purpose of these plans is to associate news technologies with existing industries. A large variety of areas are covered from new technologies such as ITC, biotechnologies, nanotechnologies and renewable energies to traditional industries that need modernisation: metallurgy, chemistry, building materials, transportation, textile, wood… This programme defines broad areas of interest and gives the details of implementation to committees representing the State, public companies, private companies, research labs and universities.

16. Conclusion : issues concerning planning and industrial policies in market economies . There is no one single type of planning. It may be more or less explicit and take many forms, according to national specificities. . Planning should take into account the interaction between the various all aspects of the economic environment. These links are economic, technical, and also social. . For this reason an important aspect of a new planning is the integration of all participants : State, regions, Universities and research centers, companies, and also social forces such as trade unions….

17. Conclusion : issues concerning planning and industrial policies in market economies . In terms of industrial policies industrial policies, planning should focus on giving guidelines and creating a favorable environment that will permit the development on diversified industries. . The financial system has to be focused to support these industrial policies. Under these conditions planining can support an efficient industrial policy based on innovative industrialisation.

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