EU policies to promote the growth of firms:
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EU policies to promote the growth of firms:

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18 Pages
English

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EU policies to promote the growth of firms: is there a need to promote winners? IFRI, 16 January 2007. Emmanuelle Maincent*. European Commission ...

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EU policies to promote the growth of firms: is there a need to promote winners?
IFRI, 16 January 2007
Emmanuelle Maincent* European Commission
The views expressed in this presentation are those of the author and do not necessarily reflect the official * European Commission's view on the subject.
Overview:
Arguments for promoting large firms and high tech sectors Stylised facts: – is it the right debate? The role of EU policies: – Which tools to promote the emergence of fast growing companies in high tech sectors? Concluding remarks
Preliminary remarks: the nature of the debate
Since a few years, strong focus on improving business environment – Entrepreneurship lower in the EU compared to US (Surveys) – High regulation impedes firm creation and firm dynamism (administrative costs. OECD studies) – Productivity gap with the US.
Fears of a process of deindustrialisation in the EU – Request for supporting industrial champions – Request for a strong EU industrial policy targeting high tech sectors – Industrial policy initiatives in Member States (France, Italy, Belgium, …)
Rationale behind the support of large firms
Economies of scale and scope – Classical argument – Logic behind the single market Knowledge diffusion – Market failures as a justification for public support to small and large firms Agglomeration effects – Acknowledge the positive role of firms in a region as a catalyst for innovation – Logic behind the French « grands projets »
Arguments pros the support of hi tech sectors
Market is not sufficient to help emerge new sectors
Replicate the Airbus case in other sectors – Classical argument
Emergence of China on intermediate industries – Increase in intra-industry trade with China – Strong industrial policy in China
2001
Total
Stylised facts (1): EU25 business structure (manufacturing)
Micro (less than 10) Small (10-49) Medium (50-249) Large (more than 250)  of which 1000 or more Source: New Cronos - Eurostat
Number of Enterprises
France
250 420 100%
81,8% 13,9% 3,4% 0,9%
0,2%
EU-25
2,165,842 100%
79,6% 15,8% 3,7% 0,9%
0,1%
Number of Employees (Mn)
France
3.9 100%
9,8% 19,3% 22,7% 48,2%
26,8%
EU-25
32.4 100%
9,8% 20,6% 25,2% 44,4%
22,3%
Turnover (Mn )
France EU-25
944,568 5,769, 100% 436 100% 5,2% 5,9% 11,9% 12,9% 17,2% 20,3% 65,7% 60,9%
44,1% 36,0%
Stylised facts (2): EU worldclass companies
The EU has internationally ranked companies The majority of them are: – in services (retail, banking, insurance) – 1/3 are in industry (energy, petroleum) Sectors: mining, petroleum, motor vehicles – are those that were involved in the industrial revolution at the end of the 19th century.
Stylised facts (3): comparative advantages in low-medium skill sectors EU25 Trade in Manufacturing Products Revealed Comparative advantage Index (average 2002-2004) Graph VI.1: EU-25 trade in manufactured products - Revealed Comparative Advantage index (2002-2004) Pharmaceuticals (HS - 6.7%) Mechanical engineering (LIS - 15.8%) Aircraft and spacecraft (HIS - 4.4%) Non-metallic mineral products (LS - 1.9%) Printing & publishing (LIS - 1.0%) Scientific instruments (HIS - 4.1%) Other chemical (HS - 10.4%) Pulp, paper & paper products (LIS - 1.8%) Fabricated metal products (LIS - 2.6%) Leather and footwear (LS - 1.5%) Building and repairing of ships (HIS - 1.2%) Food, drink & tobacco (LS - 5.7%) Motor vehicles (LS - 12.1%) Mineral oil refining & nuclear fuel (HS - 1.3%) Other electrical machinery nec (LIS - 4.2%) Furniture; manufacturing nec (LS - 3.4%) Rubber & plastics (LS - 2.4%) Telecommunication equipment (HS - 2.7%) Insulated wire (LIS - 0.4%) Wood & products of wood (LIS - 0.9%) Basic metals (LS - 3.6%) Railroad and transport equipment nec (HIS - 0.4%) Other instruments (HIS - 1.0%) Textiles (LS - 2.6%) Clothing (LS - 1.4%) Office machinery (HS - 2.8%) Electronic valves and tubes (HS - 3.0%) Radio and television receivers (HS - 0.4%) 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 Source: EU Industrial Structure (Forthcoming).
Stylised facts (4): A slow pace of change of industrial structure
60
50
40
30
20
10
Volatility of Enterprise Population (birth rate + death rate. 1999-00)
0 EE DE PL HU IE LU (*) US DK (*) NL (*) UK (*) GR SI ES (*) BE (* ) EU (*) IT (*) FI (*) PT (*) SE (*) AT CZ LV 1999 2000
Source: Benchmarking Enterprise Policy: Results from the 2004 Scoreboard (SEC(2004)1427)
Stylised facts (5a) Large firms contribute to Europe’s technological base
Share of BERD Performed by Large Firms (%) 100,0 90,0 80,0 HU NL 70,0 PT CZ PL 60,0 SK ES 50,0 EL IE
40,0 IT 30,0CY 20 0 EE , LV 10,0MT 0,0 0,00 0,50 1,00
Source: DG Research, OECD.
BERD as % of GDP and % Shared by Large Firms
DE (1) AT UK FR EU-25 (3)
1,50
US
DK
2,00
Japan (4) FI
2,50
3,00
SE (2)
3,50 BERD as % of GDP
Stylised facts (5b) Business R&D in EU large companies
Top 10 companies with more that 200 mn net sales by R&D/sales ratio
Top 10 EU companies Elan (IE) ARM (UK) Dassault System (Fr) Industria de Turbo Propulsores (ES) Schwarz Pharma (DE)
Finmeccanica (IT) Schering (DE) Ipsen (LUX)
R&D/sales ratio 39,9 32,8 27,8
21,6 20,9
19,3 19,0 18,5
Rank in Date of Employ Sector 2005 R&D cr ti ees scoreboardeaon 98 1969 2000 Biotech 155 1978(?) 1324 IT 69 1981 a 5693 IT
141 74
AstraZeneca (UK) 17,7 Infineon Technologies (DE) 16,9 Total R&D investment Source: 2005 Industrial ResearchScoreboard, + company website
19 26 97
9 21
1989 b 1946
1948 1851 1929 1913/19 26 a 1999 c 7,2 bn
2200 4400
56600 26000 4000 65000 41600
aerospace pharmacy aerospace/ energy pharmacy pharmacy pharmacy IT