Industrial Policy

First, Italy, and Europe, need a public industrial policy for strategic sectors, both tra­ditional and mature, both new and innovative (Pianta, 2013). This policy must be com­plementary to public macropolicies aimed at sustaining the aggregate internal demand whose lack is perceived by the firms (Mazzucato, 2015).

Setting up an industrial policy means choosing how and where to place national manufacturing in the global market in terms of technology, production and demand, and this implies structural changes in the economic system—not only quantitative growth in demand but also changes in its composition and direction. But we must not forget that since the activation of strong investment depends on the removal of budgetary con­straints imposed on the Eurozone countries, the game is to play out in Europe, if the idea of industrial policy is not to remain at a purely rhetorical phase. Indeed, Europe is also where several experts call for an industrial renaissance as the new Industrial Compact, which would set the goal of bringing manufacturing to 20 percent of GDP in 2020 (EC, 2014b, 2014c). Also, the new European Competitiveness Report 2014 states that one of the priorities is to set up the conditions to help company growth. Several key actions are sin­gled out in the report, which also sheds light on the impact of innovation on jobs. The role of innovation is remarked on as a potential source of job creation and not only of increasing value added and productivity, which is well documented in economics liter­ature. The report shows that product innovation has a large positive effect on employ­ment: a 1 percent increase in the sale of innovative products leads to a 1 percent increase in employment. The same does not hold for process and organizational innovations. However, we should stress the fact that process and organizational innovations usually have a positive impact on a firm’s economic performance and on product innovation as well, as also pointed out in the report (EC, 2014d, 177): “these types of innovations are very important for productivity growth, firm competitiveness and even for product inno­vation. In this context, our results suggest that policy support for these innovations should not be affected by fears of possible negative employment effects.” As is clear, the second line of policy intervention—innovation policies—should go hand in hand with industrial policies. Configuring an industrial policy entails understanding which key sectors and key research areas the public actors should invest in, but this is closely linked to innovation policies that aim to spur innovation in the private sector.

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