Industrial Policy for National Champions
Publication Year: 2011
Published by: The MIT Press
Series: CESifo Seminar Series
Title Page, Copyright Page
This book is part of the CESifo Seminar Series. The series aims to cover topical policy issues in economics from a largely European perspective. The books in this series are the products of the papers and intensive debates that took place during the seminars hosted by CESifo, ...
Initial versions of the contributions collected in this volume were fi rst presented at the conference on “ Do We Need National or European Champions? ” at CESifo in Munich, Germany, in November 2007. The conference was part of the project “ How to Construct Europe, ” funded by the German Leibniz Association, ...
Part I: Introduction
1. Arguments for and against Policies to Promote National Champions
Governments around the world, and particularly within the European Union, are deeply divided about the proper role of industrial policy, with preferences ranging from neoliberal approaches to strong government support for national champions. Some politicians argue that hands-off governance facilitates the sellout of national economies, ...
Part II: Analyses in Dynamic Settings
2. Some Thoughts on Industrial Policy and Growth
In the aftermath of WWII, many developing countries have opted for policies aimed at promoting new infant industries or at protecting local traditional activities from competition by products from more advanced countries. Thus several Latin American countries advocated import substitution policies, whereby local industries would more fully benefit from domestic demand. ...
3. National Champions and Economic Growth
Schumpeter’s (1912, 1942) view that economic growth arises through an ongoing process of creative destruction, as developed in the New Endogenous Growth Theory of, for example, Aghion and Howitt (1998), is increasingly solidly validated by empirical work. ...
4. Subsidizing National Champions
One mission of the EU Lisbon Strategy is to make Europe “ the most competitive and dynamic knowledge-based economic region in the world. ” Although there are many different ways to reach this goal, the idea of an industrial policy that promotes European or national champions as the best way to compete in a globalized world ...
Part III: Political-Economy Analyses
5. Mergers and National Champions
In recent years a number of mergers (sometimes between firms located in the same country, sometimes between firms located in different countries) have attracted a lot of media attention because of alleged protectionist positions taken by politicians and authorities of the countries that in one way or another have been involved in such mergers. ...
6. The Hidden Costs of Political Sponsorship of Industrial Firms
When in the spring of 2005 the Airbus A380 made its maiden flight, there was an upsurge of enthusiasm in Europe about the Airbus project as a testimony to the virtues of publicly supported, internationally collaborative industrial policy. This enthusiasm was not confined to France, but it found particularly heady expression there: ...
Part IV: Analyses in Static Settings
7. National Champions under Credit Rationing
Oligopoly pricing yields a deadweight loss for society. The policy implication is to maintain competitive market conditions, providing the rationale for strong European laws which have been implemented to prohibit national governments from protecting national firms. ...
8. Market Integration with Regulated National Champions
Historically monopoly regulation has been a response to market failures, such as increasing returns to scale and externalities. In most countries government intervention took the form of the creation of public monopolies. More recently the poor performance of public enterprises has motivated widespread reforms ...
9. Economic Patriotism, Foreign Takeovers, and National Champions
In a recent paper Suedekum (2010) argued that globalization may buttress government aversion toward attempts of foreign corporations to acquire large domestic firms. In his model the government recognizes the positive aspects of cross-border mergers, particularly for domestic consumers who benefit from cost reductions due to merger synergy effects. ...