“There is little doubt about the need to maintain public support for the industry”

“There is little doubt about the need to maintain public support for the industry”

2024-11-01 12:00:00

Cow to reindustrialize France? The question is not new but the current context requires us to re-examine the policies implemented. Because it is not only a question of supporting the timid movement of reindustrialization – the indicators remain ambivalent on the subject – but above all of supporting an industry faced with intensifying international competition and ruptures in technologies, policies climate and international relations.

Added to this is the constrained budgetary context, in which it is difficult to see how efforts could save businesses. Until recently, in the wake of supply-side policy, public policies in favor of industry took the form of untargeted budgetary measures, which contributed to the public deficit since a certain number of reductions in Taxes and contributions explicitly have the aim of reindustrialization or competitiveness. With the idea that tax cuts would be financed by increased activity.

Today, these untargeted policies can hardly remain the alpha and omega of industrial policy. The context leads us to question them and target interventions linked to the specificities of industrial activities. This is the turning point that the United States took in 2022, with the Inflation Reduction Act and the Chips Act, which subsidize the green and microprocessor sectors. This is also what the green industry law did in France. The relaxation of rules on state aid within the European Union provides new room for maneuver for this.

Activities set to disappear

In this new context, two issues appear fundamental for the industry: the necessary ecological bifurcation and adaptation to a more conflictual international environment.

The ecological transition raises two different types of issues for the industry: supporting the decarbonization of industrial processes and bringing about the emergence of new sectors and actors enabling the decarbonization of other sectors of the economy, such as transport, housing or electricity production. .

The first issue raises questions of competitiveness, for industries that emit high levels of greenhouse gases (chemistry, metallurgy or construction materials). It is first of all on these large emitting industrial sites that public support must make it possible to make the investments necessary for decarbonization. Ensuring a level playing field is also necessary for long-term investment planning; the carbon border adjustment mechanism is a first measure in this direction. For other industrial sectors, its extension will have to be considered depending on the effects of its implementation.

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**Interview with Dr. Claire Fontaine, Economic Policy ​Expert**

**Editor:** Thank ‍you ⁢for joining us ‍today,⁣ Dr. Fontaine. With discussions around reindustrialization‍ in⁢ France gaining momentum,‌ especially in light of current international⁣ challenges, what are the main factors⁤ contributing to this critical reassessment of⁤ industrial policies?

**Dr.‌ Fontaine:** ​Thank you for having ⁣me. The​ urgency to reevaluate reindustrialization ⁢strategies⁢ in ​France stems from⁤ a combination of factors. First, we face intensifying global competition and rapid technological changes ⁢that necessitate a‌ more adaptive and responsive ​industrial policy. The economic landscape is constantly evolving, and France needs to position itself strategically to not only maintain but also enhance its industrial capacity.

**Editor:** ‌You mentioned technological changes and competition. ‌Can you elaborate on how these elements impact the industrial⁣ sector in France?

**Dr. Fontaine:** Certainly. The⁢ rise of emerging‍ technologies and shifts in global supply chains mean that industries must innovate and adapt swiftly. For example, the transition to greener technologies and⁢ sustainable practices is now more than a trend;‌ it’s a necessity. France must navigate these transitions effectively‌ to prevent‍ losing‍ ground ⁤to countries​ that​ are more agile in adapting to new technologies and ‍global demands.

**Editor:** You’ve⁣ also ​highlighted the constrained budgetary⁤ context which complicates industrial support. Can you explain‌ how‌ this affects policy-making?

**Dr. Fontaine:**‍ Absolutely. The constrained financial environment means that blanket ‍policies, such as ⁢untargeted tax cuts, are‌ no longer⁣ sufficient. While they were⁤ thought to stimulate growth by enhancing competitiveness, they have ‍often contributed to⁣ public deficits without ‌delivering the desired economic results. There’s ⁤a clear need for targeted interventions that consider the unique challenges⁢ and opportunities within various industrial sectors.

**Editor:**​ What lessons can⁢ France learn from the United States’ approach, particularly regarding the Inflation Reduction Act⁤ implemented in 2022?

**Dr. Fontaine:**⁢ The⁢ U.S. has pivoted to very ⁤strategic, targeted investments designed to bolster specific industries,⁣ particularly in clean energy and technology. This approach not only incentivizes innovation but also‍ aligns public policy​ with broader economic⁣ goals. France could ⁣benefit ​from adopting ‍a similar mindset—valuing strategic investment​ over broad ⁤tax reductions and focusing on‌ specific sectors⁤ that promise growth and sustainability.

**Editor:** Lastly, what ⁣would you suggest‍ as the next⁢ steps for France in terms of reindustrializing?

**Dr. Fontaine:**‌ The ⁣next ⁣steps should include a comprehensive review of existing ⁣policies and a ‍push towards collaborative frameworks‌ involving government, industry, ⁢and ​research institutions. It’s crucial to ​engage in‍ dialogue with stakeholders to identify which sectors⁤ need support and how best to‌ direct resources. By prioritizing targeted⁣ support, enhancing innovation capabilities, and embracing‍ sustainability, France can forge a resilient path towards a new industrial era.

**Editor:** ⁢Thank you, Dr. Fontaine, for your insights on ⁣such⁣ a ​crucial topic. ⁢We look forward to seeing how⁢ France navigates this ‍pivotal moment ‌in its industrial landscape.

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