chapter  4
26 Pages

Government-industry relations

In this chapter a contrast is drawn between the interventionist character of government-industry relations in Western Europe in the 1970s, and the more market-oriented emphasis of the 1980s. Government-industry relations in the 1970s were characterised by an interventionist paradigm in which national governments attempted to influence the process by which resources were transferred from older and ailing industries to newer and more competitive ones. Such intervention often led to large sums of public money being wasted in futile attempts to rescue failing firms, slowing down the rate at which West European economies responded to changing global demand patterns. The 1970s may be characterised as the era of'industrial policy', which in practice often amounted to little more than an attempt by national governments to provide a spurious coherence to a series of ad hoc programmes of aid to industry. These programmes were often formulated not as part of any planned attempt to influence the evolution of national economic structures, but were more usually reactive, crisis measures influenced by such considerations as the symbolic significance, electoral importance, and regional presence of firms in difficulty. As a consequence of the incoherent and highly politicised nature of industrial policy, it often decelerated rather than accelerated necessary changes in the economies of Western Europe, making the region more vulnerable to competition from Japan and from 'newly industralising countries' such as South Korea and Taiwan.