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Published by EH.NET (May 2000) 
 
James Foreman-Peck and Giovanni Federico, _European Industrial Policy: The 
Twentieth-Century Experience_. Oxford: Oxford University Press, 1999. xvi + 
466 pp. $105 (cloth), ISBN: 0-19828998-7. 
 
Reviewed for EH.NET by Francesca Fauri, Professor of Istituzioni Economiche 
Europee, Faculty of Political Sciences, University of Bologna in Forlė. 
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The aim of this multi-authored volume is to contribute to an understanding 
of European industrial policy, broadly interpreted, by introducing an 
historical perspective. The collection of case studies allows the reader to 
become familiar with the differences among countries, and the remarkable 
continuity within countries, of European national industrial policies. 
 
The book analyses the industrial policies of four broad groups of 
countries: the largest Western European states - Britain, France, Germany 
and Italy - a group of small, but highly productive nations - Sweden, the 
Netherlands, Belgium and Ireland - three states with a long tradition of 
state industrial regulation: Spain, Portugal and Greece, and finally the 
case of Russia, a huge economy with a deep-rooted tradition of centralized 
decision making and state intervention. 
 
British industrial policy from the nineteenth century was characterized by 
economic liberalism, and despite the greater industrial role of the 
government after the First World War, it clung to the liberal precepts of 
minimum state expenditure and 'self-regulation' during the inter-war 
period. It was only after 1945 that the Labour government took a much more 
interventionist stance-nationalizing industries such as the coal industry, 
gas, electricity and railways and adopting a variety of measures including 
import controls and industrial subsidies at levels unknown in the past. In 
the 1980s, the state reversed to more market-oriented industrial policies: 
it abandoned state ownership and direction of industry, radically improving 
the performance of British economy (even though the author claims that the 
redirection of economic activity was not necessarily ideal and skill and 
learning deficiencies began to emerge). 
 
The French claim to have invented the concept of industrial policy and, as 
a matter of fact, since Colbert, the idea that productive capacity can be 
increased by state aid has never been abandoned by French governments. 
Curiously enough, the chapter on Germany is titled "The Invention of 
Interventionism," contending with the French for the primacy. The first and 
most important industrial policy instruments used by the German government 
since the 1880s have been tariffs and subsidies. In this case economic 
performance has shown that state interventionism and a positive economic 
trend are not incompatible at all. Also the Italian state has a 
long-standing tradition of intervention, progressively shifting its range 
of interest from railways, tariffs and public procurements to bailouts, 
planning regulation, subsidization and the use of state-owned enterprises. 
Albeit, not with German results, being in the words of the authors "much 
less effective than it may have been given the large resources allocated to 
industrial promotion." 
 
Small states such as Sweden, the Netherlands, Belgium and Ireland, all 
experienced, though in different historical periods, state attempts to 
influence industrial growth, usually ranging from rare selective 
interventions (protection, subsidies, nationalization) in the past, to 
general efforts to facilitate and stimulate industrial growth in more 
recent times. The Netherlands is a case in point: arguably the most liberal 
country in Europe since its creation in the sixteenth century, between 1948 
and 1963 the government actually intervened in support of declining 
industries as had never done before (or has done since). 
 
Spain, Portugal and Greece, three latecomers in the industrialization 
process, all present, with different degrees of intensity, a key state role 
in the promotion of industrial development. Spain, as the other two, was 
characterized by a long-term presence of an authoritarian government, but 
it was the only one to combine authoritarianism with a political ideology 
of intense and large-scale industrialization. Yet, results were meager: the 
state interventionist approach proved not very efficient, supporting the 
implementation of a rigid system of import substitution that soon became 
not only superfluous, but harmful to overall economic growth. 
 
Russia is the utmost example of industrial policies with maximal state 
intervention, at least until the 1990s. During the Tsarist peacetime 
economy (1890-1913) the state promoted the development of heavy and defense 
industry in order to remedy the technological backwardness of the country. 
The main beneficiaries of Tsarist industrial policies were the railway, 
engineering, iron, steel and defense industries, with much of the burden 
falling on the agricultural sector as a result of tax policies. After the 
New Economy Policy interval (1921-27) in which the Bolshevik policy-makers 
tried to reverse the policy of nationalization by privatizing small 
industrial enterprises, industrial policy in the Stalinist era became 
highly centralized, the state owned all productive assets and 
quantity-oriented plans were utilized as the main coordination mechanism. 
State planning was retained as the key industrial policy instrument until 
1992 when economic decision-making started being decentralized to banks, 
firms and regions and Russia started its difficult transition to a market 
economy. Yet, historical traditions are likely to influence the pattern of 
industrial organization and policies that Russia will develop in the 
future. 
 
The introduction of a cultural theory of industrial policy in the last 
chapter helps explaining why European industrial policies show different 
degrees of state intervention. Inter-country differences in the propensity 
to intervene also depend on the dimension of trust: industrial policy 
requires an adequate degree of trust to succeed. 
 
Surely this volume has two great merits: it provides a collection of case 
studies constructed along the same line of discussion themes, thus 
facilitating comparative analysis, and it offers a synthesis of a great 
deal of literature unavailable in English. Undoubtedly, the book has 
fulfilled its task of rendering the future writing on the history of 
European industrial policy more manageable. 
 
 
Francesca Fauri is author of "A Comparative Analysis of Italian and British 
Management before World War II" in Vera Zamagni and Lars Engwall, editors, 
_Management Education in Historical Perspective_ (Manchester University 
Press, 1999) and "Economic Miracle and Italy's Chemical Industry: A Missed 
Opportunity" in _Enterprise and Society_ (forthcoming, summer 2000). She is 
currently working on a book on "L'Italia e l'integrazione economica europea 
(1947-2000)." 
 
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Published by EH.NET (May 2000). 
 
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