The Reindustrialization of Europe: A Strategic Priority to Maintain European Power
The reindustrialization of Europe is a strategic priority to sustain European power.
The days when the European Union accounted for 39% of global manufactured exports are long gone. Today, with only 31% of global manufactured exports and research and development (R&D) spending around 2.3% of its GDP, the European Union is falling behind the United States (3.1%) and South Korea (4.8%). These delays are all the more concerning as, for the first time in 300 years, Europe is lagging in key emerging technologies, such as the energy transition and semiconductors. Moreover, the EU is heavily dependent on rare metals and critical minerals—essential raw materials for modern technologies—which further weakens its strategic autonomy.
Deindustrialization has impacted EU countries unevenly. France, for example, has experienced the most severe decline, losing two million industrial jobs between 1980 and 2020. As a result, the share of manufacturing in France’s GDP has fallen below 9%, significantly lower than the European average of about 14% and Germany’s 19%.
This deindustrialization is particularly alarming in the current ultracapitalistic era, where both the United States and China are accelerating their industrial development, supported by lower energy and labor costs. Furthermore, the positive externalities generated by industrial activity—such as innovation ecosystems and skilled employment—have no real equivalent in the service sector.
Europe, however, has not given up. In recent years, it has launched several concrete initiatives to foster reindustrialization. On September 21, 2023, the EU adopted its Semiconductor Regulation to boost the attractiveness of Europe for such strategic investments. In March 2024, the Critical Raw Materials Act was approved by the Council to strengthen the EU’s autonomy in sourcing essential metals for digitalization and decarbonization. The Net-Zero Industry Act simplifies permitting procedures and introduces a form of European preference in public procurement processes. State aid approvals have also become more frequent and sometimes align with American practices. For instance, on January 8, 2024, Germany secured €902 million in support for the construction of a Northvolt battery factory for electric vehicles, successfully competing with U.S. offers. Germany also demonstrated greater assertiveness by announcing, on July 4, 2024, additional tariffs on imports of Chinese vehicles.
Nonetheless, the European Union still struggles to harmonize its industrial policies and faces three major challenges: a lack of adequate financing, a shortage of skilled labor, and fragmented governance.
We must remain optimistic. Neither overconfidence nor complacency is called for, but rather a focus on tangible facts: Europe still possesses key assets to remain competitive in the industrial race of the 21st century. It can rely on innovative entrepreneurs, strong industrial leaders, courageous investors, and policymakers who are increasingly convinced of the need for reindustrialization. The late 20th-century illusion of a Europe without industry is behind us—a dramatic mistake we must now correct. It is up to us to make up for lost time.
