With the third industrial revolution and the Covid-19 crisis, the world has entered into a period of global transformations. The current industrial revolution shows the need for an industry adapted to the “new world”, while the Covid-19 crisis has shown that national or European sovereignty (in health and medicine, food, digital, etc.) is essential. The combination of the two global transformations makes the task even more complicated because i) Covid pleads for de-globalisation, while the digitalisation favours – so far - IT giants and globalisation, and ii) because at the same time it highlights the degree of urgency. Research and d eve l o p m e n t (R&D) and industry (which performs more than 85% of global R&D) are essential to stay at the forefront of the kind of transformations that are shaping this new economic world. This is all the more critical as history recalls that a country that misses an industrial revolution becomes relatively underdeveloped and rapidly impoverished.
The present would be full of all futures, if the past did not already project a story into it.
André Gide (1869-1951), « Les nourritures terrestres », 1917
Generally speaking, the globalisation of business (the economic globalisation) has certainly become excessive in certain aspects, such as when it is based on artificially created comparative advantages. It can lead to offshoring, dumping, quality reduction, trade disputes, unfair competition, and patent infringements (particularly by China).
One of the great certainties of the Covid crisis is the return of state interventionism, i.e. the great comeback of the state as master of resources and manager of the economy. In that sense, the health sector has been completely reassessed by this crisis. In the recent past, health investments were more inspired by economic globalisation (based on the attraction of value chains, search for the lowest cost) than by financial globalisation (better risks and prevention risks, cooperation and regulation). The Covid-19 pandemic has emphasised all the dangers of such a logic. Big changes - such as relocations of industry, creation of more efficient regional eco-systems, a clearer vaccine policy, the creation of an industry of war against the viruses, state interventionism… - are to take place in the coming years in this area. More generally, the Covid crisis represents a collective awareness and a change in behaviour, with the enhanced role of electronic commerce, the increased role of telecommuting, and the increased role of digital technology and robots.
The demands of a great people are on the scale of their misfortunes.
Charles de Gaulle (1890-1970), Président of French republic
The third industrial revolution, which began in the 1980s, is based on computer science and technology, including digital. As regard IT, the lag of Europe (compared to the US or China, e.g.) is unfortunately quite big. Getting back in the race in the IT sector seems a very difficult task in view of the market situation (oligopolies) and the exorbitant entry costs. As regard digital sovereignty, radical changes seem necessary. Europe needs to evolve from a regulatory superpower to a technological superpower if it truly hopes to safeguard its values and interests in the digital space, reap the economic benefits of emerging digital technologies and protect Europeans against disinformation and cyber attacks. Until now, Europe has been more concerned with writing the rules of the game than playing it, continuing to follow China and the United States in the development of leading technology solutions and companies. But the referees - no more than the spectators - never win games: the EU must complement its regulatory influence with investments in digital infrastructure, skills and industry in order to become a fully-fledged digital player. Europe has missed the first generation of digital transformation, but it must position itself to compete in the next wave of technology, such as advanced computing, in which European companies have several competitive advantages.
A good combination of positive regulation and strong industry can be found in the US defence sector. To strengthen its defence strategy, the United States has equipped itself with a massive arsenal of legal and economic weapons. The extraterritoriality of US laws can sometimes stifle its competitors … and allies. These laws play a crucial role, and the fight is fierce.
This article deals with many issues, including the different forms of globalisation (economic, financial, political, social, cultural and legal globalisations), the scale of deindustrialisation and the reasons that have led to such a decline in industry, especially in Europe. This process has even been amplified in recent years due to multiple causes such as the drop in domestic demand for industrial products, relocations of firms, unfavourable taxation or difficulties in recruiting. In addition, the countries of Eastern Europe have specialised in subcontracting by emphasising their cost competitiveness, which has accelerated the deindustrialisation of the large EU countries.
The article also presents some concrete cases of necessary sovereignty, such as the pharmaceutical sector, the food sector, the energy sector (and in particular electricity against hydrogen), the defence sector, the space or digital sovereignty, which represents a symbol of the third industrial revolution. A number of avenues are presented to encourage reindustrialisation and the reconquest of a certain sovereignty.
This public person which is thus formed by the union of all the others […] is called State when it is passive, and Sovereign when it is active.
Jean-Jacques Rousseau (1712-1778), Du Contrat Social, Livre I, Chapitre V
Two major questions surface:
- What does reindustrialisation mean in today’s world? It is certainly not about going back to old industries or saving outmoded businesses at all costs, or letting our economies shift into essentially service economies. It is about fostering the structural changes underway in all the industrial sectors. Reindustrialising means essentially facilitating robotisation and digitalisation.
- Which sectors should be prioritised? The American (or even Chinese) example is instructive: the United States have never ceased to ensure efficiency, power and sovereignty in five strategic sectors: defence (being ready for an eventual confrontation), pharma (being ready to face pandemics and treating the population), finance (being able to finance possible conflicts in particular), agrifood (being able to feed its population) and energy (being able to any situation to operate the industrial tool in particular). At their disposal, new weapons of economic war such as the extraterritoriality of laws (which stifles competitors and allies), but also agencies such as DARPA (Defense Advanced Reearch Projects Agency), which finances and promotes innovation, and seeks to bring together research and entrepreneurs and BARDA (Biomedical Advanced Research and Development Authority), the office responsible for the purveyance and the development of medical solutions against bioterrorism, pandemic influenza and emerging diseases. It is therefore a question of financing, but also and above all of long-term industrial strategy. Europe This public person which is thus formed by the union of all the others […] is called State when it is passive, and Sovereign when it is active” Jean-Jacques Rousseau (1712-1778), Du Contrat Social, Livre I, Chapitre V 6 Discussion Paper - DP-48-2021 would do well to learn more from it. The EU has clearly taken this path, with the increase in dedicated budgets, and the creation in 2018, at the initiative of France and Germany, of the European foundation JEDI (Joint European Disruptive Initiative), the European equivalent of the American DARPA. A solution for other sectors?
Without a systemic and strategic reaction, the European Union could well find itself reduced to a market that continues to lose sovereignty, buys American or Chinese products at first, then underdeveloped afterwards. No sovereignty without industry, it’s that simple. In addition, the strategic, political and cultural dimensions of an industrial revolution are as important as its technical and scientific dimensions. Without industry, given its current geopolitical place, Europe could continue to lose ground, with France being undoubtedly the most downgraded country in terms of power, considering its current political status.