Diapositiva 1 - Policy Network

Report
The case for a Microeconomic European
Policy
Miguel Sebastián, Universidad Complutense de Madrid
Policy Network meeting
September 6, 2012 , London Stock Exchange
The case for a Microeconomic European Policy
• It is indubitable that a Macroeconomic European
Policy is needed, at least for the euro area
• It should include:
• A Monetary Policy, with a real lender of last
resort, a new governance and new goals for
the ECB
• A real Fiscal Policy coordination, including
eurobonds
• Financial Stability issues, including a banking
union and an European regulator, to avoid
asymmetric bubbles.
2
The case for a Microeconomic European Policy
• But a Microeconomic Policy at the European
level is also needed, not only because of the
current global and euro crises, but for “structural
reasons” as well.
• Such a Policy should include:
• An Energy and Raw materials European policy
• A Tourism European Policy
• An Industrial European Policy, including not
only the Manufacturing sector, but the ICT
sector as well.
3
The case for a Microeconomic European Policy
The “structural reasons” for such an European Policy
are:
1. The EU is steadily loosing weight in the world
economy
2. The European energy dependence is
worsening. And the raw materials
dependence is dramatic
3. The EU share of world exports is shrinking,
and so is the relative European
manufacturing sector.
4. Tourism is a stronghold, but action is needed.
4
1. The EU is steadily loosing weight in the world economy
Europe is shrinking at a faster pace than the US
Share of World GDP
EU
USA
BRICS
Rest of the
World
1980
32%
25%
12%
31%
1990
29%
25%
15%
31%
2000
25%
23%
18%
34%
2010
20%
19%
25%
36%
??
??
50%
??
2040 (E)
The BRICS (Brazil, Russia, China, India and South Africa) have more than
doubled their share in world GDP in the last 30 years and, according to
several forecasts, by 2040 they will become almost half the World's GDP.
5
2. The European energy dependence is worsening
European Union Energy Dependence
In the last ten years the EU’s energy
dependence has increased almost 10
points.
60
58
Percentage
56
An increase of 30 € in oil prices (what the
IEA expects for the next 10 years) will
mean an additional annual transfer of
132.000 M€ to oil producing countries.
54
52
50
48
46
44
The EU annual budget sums up to
140.000 M€.
42
40
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
EU Net imports of primary energy
600.000
486.178
Million €
500.000
376.941
378.258
400.000
311.930
208.999
300.000
187.247
200.000
96.175
168.947
199.646
137.125
100.000
Energy dependence,
together with rising oil
prices, have multiplied
the EU’s energy import
bill by 5 in the last 10
years
0
1999 2000 2001 2002 2003
2004 2005 2006 2007 2008
6
2… and the raw materials dependence is dramatic
Critical raw materials
According to a recent study, developed by a group of experts in the framework of the EU Raw
Materials Initiative, Europe is on a critical position to ensure the supply of some raw
materials.
Antimony
Display panels, micro capacitors
China 91% Bolivia 2% Russia 2% South
Africa 2%
Indium
Beryllium
Military applications
EEUU 85% China 14% Mozambique 1%
Magnesium
Cobalt
Lithium-ion batteries, synthetic fuels
D.R. Congo 41% Canada 11% Zambia
4%
Fluorspar
Lenses
China 59% Mexico 18% Mongolia 6%
Gallium
Germanium
Graphite
Thin layer photovoltaic, Led
N.A.
Niobium
Platinum
Group Metals
Rare Earths
Displays, Thin layer photovoltaic
China 58% Japan 11% South Korea 9%
Canada 9%
Space, manufacturing
China 56% Turkey 12% Russia 7%
Micro capacitors, ferroalloys
Brazil 92% Canada 7%
Fuel cells, catalysts, seawater desalination
South Africa 79% Russia 11% Zimbabwe
3%
Permanent magnets, laser technology
China 97% India 2% Brazil 1%
Fiber optic cable, IR optical technology
China 72% Russia 4% EEUU 3%
Tantalum
Micro capacitors, medical technology
Australia 48% Brazil 16% Ruanda 9% D.R.
Congo 9%
Steelmaking
China 72% India 13% Brazil 7%
Tungsten
Drills, steelmaking
China 78% Russia 5% Canada 4%
The study considers 14 of 41 raw materials as critical. This is due to their high relative
economic importance and to high relative supply risk.
7
3.The EU share of world exports is shrinking
Global Trade of Goods
The EU’s share in goods trade, as an
approximation of industrial production,
has decreased in the last years, mainly
because of emerging economies growth
Share in world trade of Goods
EU excluding internal trade
Percentage
19%
18%
17%
16%
15%
2003
2004
2005
2006
2007
2008
2009
8
3. ….and so is the relative European manufacturing sector.
Example 1: Shipbuilding
The global market for new ships has increased
one and a half times in the last 10 years but
the production in European shipyards has
remained almost constant, reducing notably
the EU share in the shipbuilding global
market.
Production Thousands CGT
Shipbuilding Sector Evolution
50.000
45.000
40.000
35.000
30.000
25.000
20.000
15.000
10.000
5.000
Europe
0
1999
2000
Rest of the World
World Total
Europe
2001
2002
2003
2004
2005
2006
2007
2008
2009
9
3. ….and so is the relative European manufacturing sector.
Example 2 : Automotive Sector
In 1999 European factories produced 3 in 10 of
all the cars and trucks built in the world.
Ten years later they produce 2 in 10 and the
tendency is a further decrease.
1999 Automotive Production
Rest of the
world
66,7%
China
3,3%
2009 Automotive Production
Rest of the world
57,2%
EU (15)
30,1%
China
22,6%
EU (15)
20,2%
10
3. ….and other technological sectors
Example 3: the ITC Sector
The EU shows a big gap between imports and exports
in the ITC Sector. Its coverage ratio is just above 0,5.
This difference is mainly due to hardware and
semiconductors. Only 9,2% of the sales of the top 25
companies in this area come from Europe.
ITC Imports and Exports (2008) Million US$
Hardware & Semiconductors Top 25 Enterprises. Sales
309
287
USA; 31,8%
174
159
ITC Exports
114
ITC Imports
115
Asia; 59,0%
84
58
EU
USA
Japan
Europe; 9,2%
Korea
11
4. Tourism is a stronghold in the EU
But action is needed to keep such a
position
The EU is currently the main destination
for World Tourism
This year the number of tourists will
reach 1 billion, for the first time ever
By 2020 this number will climb to 1,5
billion (an additional half a trillion € ).
The EU must act to preserve its
leadership.
Share in world tourism
Africa+Mi
ddle East,
11%
Americas,
16%
Asia+Pacif
ic, 22%
Source: UNWTO
EU, 39%
Other
European,
12%
12
What should a Microeconomic European Policy consist of?
• The EU micro policy should be complementary,
not a substitute for domestic micro policies.
• It is not a matter of spending more at the EU
level, but spending better, shifting public
investment and financing support towards EU
exporting sectors
• A higher coordination of policies is needed
• We must improve EU regulation.
• We should change the role of EU surveillance
institutions: from chasing member states (and
European companies) to building an EU
productive industry.
13
What should a Microeconomic European Policy consist of?
In particular, specific targets for EC authorities and
EU institutions should be established regarding 3
measurable and accountable goals:
1. The EU share of world output (its decline
should be stabilized).
2. The EU share of global exports (it should be
held constant).
3. The EU current account (it should improve)
14
Some examples
Energy Dependence
United, Europe may better manage its uncertainties, thanks to a stronger
negotiating position through:
7,2%
11 TWh
• An EU single voice
15 TWh
• More interconnections
2 TWh
13%
12 TWh
• A common regulatory framework
35 TWh
8 TWh
20,9%
8,6%
1 TWh
18TWh
9 TWh
8 TWh
9,7%
41 TWh
15,2%
3%
1 TWh
1TWh
key regional electric connections capacity in Europe
X%
% Cross-border electricity between regions
The solution of the Russian-Ukraine gas crisis of 2009 is an example of our strength if
we negotiate as one.
The same strategy is needed when discussing with Northern African countries.
15
Some examples
Tourism
In order keep the EU leadership in World Tourism, we need to compete for
the new markets: the Russian, Indian and Chinese outbound travel markets
• Joint packages
• Multiple visas, exchange of information
• Joint promotion abroad
Number of tourists worldwide (M)
In 1980 there were only 270M
tourists world wide. This year,
2012, we will reach 1000M. By the
year 2030 there will be 1800M
tourists.
Each visitor spends 1000$ on
average. So, we are talking about a
800b $ cake.
2000
1800
1600
1400
1200
950
800
400
530
270
0
1980
1995
2010
2020 (E) 2030 (E)
Source: UNWTO
16
Some examples
Single Digital Market
In order to reach a real Single Digital Market we must accomplish:
•Remove technical and legal barriers
•Accessibility: 100% population covered with basic broad band
•Infrastructure: Deploy of New Generation Networks
•Promote intra EU e-commerce
Single Digital Market
Europe has a great potential in this
area. In 2010 only 20% of European
enterprises sold through internet to
other European countries and only
7% of European citizens had bought
something through internet from
another European country.
80%
70%
60%
50%
Only in their country
55%
40%
In other European
Countries
30%
20%
10%
24%
20%
7%
0%
Enterprises that sell
through internet
Citizens that bought
through internet
17
Some examples
Industrial Policy
Following the (unfortunate) years in which “the best industrial policy is no
industrial policy”, the need for an active European industrial policy should
be widely recognized.
Why an European Industrial Policy?
Although Industry only represents 18% of the EU GDP, it accounts for:
• Internationalization: Industry produces almost 75% of all exports
of goods and services from the EU.
• Innovation: Industry is responsible from almost 80% of the R+D
executed by the EU private sector.
• Productivity: Industry productivity is 9% higher than the
productivity of the whole economy.
INDUSTRY = JOBS + EXPORTS
18
A final question for debate
We want a strong and dynamic industrial sector and we also want to be
leaders in:
Climate
change
prevention
Welfare
system
¿?
¿?
Fiscal
discipline
Monetary
orthodoxy
Can we make all these 5 goals compatible?
19
The case for a Microeconomic European
Policy
Miguel Sebastián, Universidad Complutense de Madrid
Policy Network meeting
September, 2012 . London Stock Exchange

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