Industrial Development in the EU: What Lessons for the Future Member States?

Abstract

The paper analyzes the main characteristics and major changes in manufacturing industry in the old EU member states over the past twenty years, in order to draw some lessons for the Southeast European economies in transition, often referred to as the Western Balkans (WBs) - Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro and Serbia. During the last twenty years the more developed EU member states have experienced substantial changes in the structure of their economies, with services becoming the prevalent sector in terms of the most important indicators. Nevertheless, there is great heterogeneity within the EU regarding the contribution of manufacturing to employment and value added. The global financial and economic crisis from late 2008 onwards has revived the debate about the role of industry, its importance for economic growth and for international competitiveness. In this context, there has also been a renewed interest in industrial policy and reindustrialization. The ongoing analysis of trends in the EU could be extremely relevant for the WB countries, since these countries have gone through a process of strong deindustrialization. Given that their level of economic development is still low, manufacturing industry remains indispensable for future economic growth. The EU experience could offer useful guidelines for formulating future policies in this area.