Zoran

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Socio economic determinants;

Deindustrialisation;

Possibility and improvement of alternative action;

Green Industrial Policy in Croatia

South European type of capitalism - competitiveness characterized by a low level of quality based competition, little non-price coordination, as well as strong emphasis on the importance of small firm (cf. Amable, 2003: 104-106);

Long term economic conditions Between 1980-2013 average annual growth average 0.2%; decline of employment -0,6; Distortion of relative prices in favor of non tradable sectors (construction and real estate),

which is a direct by-product of the real estate boom, has had stifling effects on export performance in the period 1998 - 2013 (Tkalec, Vizek, 2014);

Worsening terms of trade, decline of cost competitiveness in comparison to main foreign trade parterns, influenced entry and exit in the national market;

Debt increase of all agregates from 2000 – onwards; Protection of the property right is worse in comparison to the quality of other

institutional variables – e.g. quality of education, (World Economic Forum);

The location model instead of a development model (refeudalisation of socio economic conditions)

Focus on public investments Agriculture+Tourism+Road (motorway) construction+Ship building;

Structural conditions The size of the national markret diminished as result of the breakup of ex Yugloslavia; Continuing political restructuring (‛political party oligopol - HDZ – SDP)’ instead of technological and technical reconstructuring within state owned enterprises;No success in starting a development agenda Separation of powers, (emphasis on the presidential functions during the nineties replaced by an emphasis on executive power from 2000 onwards)

Economic conditionsLiberalisation of good/service markets parallel with fixed foreign exchange rate as well low technological development in the period; low import inflation facilitated strong dependence on imports

ImplicationsThe concentration of power in the hands of a minority;Foreign direct investments dominantly in the service sector;Insufficient use of the result of the science sector, strengthening mental silos within institutions;Weak structure changes in individual markets in comparison to the EU average slower entry and exit from individual markets; emphasis on the competitiveness of the domestic market; Unsustainable socio economic framework - economic recession turning into depression!!

In 2010, manufacturing firms accounted for 13.3% of GDP, (their counterparts in the service sector 42.8%) vs. 2005: manufacturing firms accounted for 14.6%, of GDP (41.4% in the service sector);

Decline of the industrial production in 2012 - 8% reduction in comparison to 2005;

Decline of the number of the employees in the period 2008-2012 (16.7%), 207.2 thousand employees in 2012; mainly in technologically less complex industries;

Decline of prices in the industrial sector over the last fifteen months;

Decline of gross investments in fixed capital in 2012 (107.3 bilion kn) in comparison to 2008. (171.6 bilion kn), similar to figures from 2004 (107,9 bilion kn);

Considerable decline of share of Gross Expenditure on Research and Development (GERD) in GDP in the last ten years (2004. 1.05% vs. 2012. 0.75%);

Similar number of EPO applications on milion inhabitants in 2000. and 2011. (3.45). But in 2008. the number was 6.51 – Adaption of inventive activities in period of crisis.

In the period 2003.-2012, a decline of investments per employee, expenditure per employee in science and education sector, increase of wage expenditure parallel with increase of number of institutions (the biomedicine sector is exception);

In technical and nature sciences (focus on applied and development projects), higher expenidture per employee, higher gross salary per employee) in comparison to the other scientific disciplines;

Country Key Research and Technology Organisation (RTO)

Characteristics

Germany’s innovation model

Frauhofer Focus on incremenatal innovation, countinous improving of the business models. Strong manufacturing sector in the national economy;

Taiwan’s innovation model

ITRI The emphasis on technological intermediation (i.e. recognition of technological opportunities in the world and their commercialization in Taiwan); It relies on external scientific inputs and domestic SME sector (semiconductor industry);

Britain’s innovation model

TWI Reliance on basic research; weaker industrial base in comparison with the leading EU countries (a strong heritage of the 19th century), Reducing importance of the science from 20st century until now result of weaking the industrial sector;

Austrian innovation model

Austrian Institute of Technology

Balance between basic and applied research, Austrian Institute of Technology - a key institution (the founders of Federation of Austrian Industrialists and the Ministry of Transport, Innovation and Technology) (Key areas Energy, Mobility, Health and Environment, General and individual safety, health and environment and innovation system)

Turkish model TUBITAK A strong dedication to state funding, the high involvement of staff trained abroad; Significant focus on the defense industry; Tendency towards applicability of their activities;

Monotechnological institutions (majority state owned);

Several institutions founded and developed by foreign supranational organisations (e.g. the World Bank programmes) – strong reliance on non technological services (from 2000-2013);

Weak recognition of these institutions as initiators of relevant socio-economic activities and processes;

Weak interaction in the relationship between state sector – business sector- science and research sector;

Fresh Ideas within initiatives

Objectives

An industrial policy for the globalisation era (2010)Communication from the Commission

1) Bringing together a horizontal basis and sectoral

application; 2) Consideration of whole

value and supply chain; 3) Monitoring of industrial policy and performance

A) Improving framework conditions for industry; B) Strengthening the Single Market; C) A new

industrial innovation policy; D) Capitalising on globalisation; E) Promoting industrial modernisation; F) Specific topics – Space, Sustainable mobility; Societal challenges; Energy Intensive Industries

Europe 2020: A European Strategy for Smart, Sustainable and Inclusive Growth

1) Smart Growth 2) Sustainable Growth 3) Inclusive Growth

A) 75% of the population aged 20-64 should be employed; B) 3% of th EU GDP should be invested in R&D; C) The 20/20/20 targets in terms of reduction of greenhouse gas emissions, renewable energy production and energy efficiency; D) The share of school dropout should be under 10% and at least 40 percent of the population between the ages of 30 and 34 should have a degree or diploma; E) 20 million fewer people should be living below the poverty line;

Industrial Policy flagship initiative - a Stronger European Industry for Growth and Economic Recovery - Industrial Policy (2012) Communication from the Commission

1) Priority actions - boost productivity, growth and job creation 2) Working across all EU policies to maximise synergies and have best possible impact 3) A new way of making industrial policy - open partnership

Sustainable industrial production in the EU (Increase share of industry from its current level of around 16% of GDP to as much as 20% by 2020) Investments in specific areas a) KET markets, improving production technology for clean technology, b) Strengthening the internal market (eg. Patent protection in the EU), c) Access to finance and capital markets; D) Human capital (job creation, predicting changes in the labor market in the future)

Renaissance of Industry for Sustainable Europe (RISE) (The concept)

1) an innovation, efficiency and sustainable technology offensive to modernise our industrial base and increase our core strengths; 2) Higher level of investments into R&D and Innovation; 3) Complete the internal market; 4) skills and labour force for the next industrial revolution

AssumptionsDecline of authoritative (repressive) actions by the government; Improving terms of trade products (connected with low entry rate and drop rate);Internal and external debts (deleveraging and debt repayment plan ); Fiscal Policy (anti-ciclycal framework); Monetary Policy (anti-ciclycal and indepedent); Science policy (better use of science research results);

ObjectivesReindustrialization as foundation of socio economic development; Development policy in the context of global challenges;

The emergence of new concepts and visions on the socio economic scene (eg. Energy Transition, Development of optical networks in Croatia)

City as a policy subject (reindustrialization) associated with the construction of adequate (smart) infrastructure, strengthening of mechanisms for socio-economic effects on subnational and supranational levels;

National priorities in the social sectors (eg. Sciences) must reflect the criteria of equal access to social infrastructure;

In terms of new industrial policy ◦ a) Searching for niche markets - competition based

products (social market chains creating new value added) ◦ b) Understanding material resources and energy prices,

which have an impact on the final price of products;

Green Growth -Trajectory of economic development that fully internalizes environmental costs (related to climate change) and sustainable use of non-renewable resources (Rodrik, 2013); Technological revolution within a green growth paradigm – based on interrelated set of new technologies, industries and infrastructural networks develop in intense feedback, providing market and suppliers (Mazzucato, Perez, 2014); Deficiency – The technological convergence is not out of charge (e.g. fragmentation of the telecommunications network (natural monopoly), in hands of private sector is inefficient The Guardian 11 August - 2014), direction is become socio political choice (Perez, 2013)‘Green directive’- ready-made route that will make the multiple possible directions result to questionable innovative products and service

Challenges Socio political transitions Optimal production practice instead of mass production Who will participate in a new socio economic structures (type of ownership)

Challenges 1) Decouple economic growth from resource use and pollution; 2) Provide more value with less environmental impact and better economic efficiency;

Greeing of IndustriesResource of productivity; Pollution Prevention; Safe Chemical Management;

Creating of green Industries Environmental Technologies; Environmental Services;

Challenge Priniciple

Environmental challenges

To limit global warming to 2°C, humanity needs to reduce half its total amount of greenhouse gases (GHG) emissions by 50% by 2050

Fix to market failure based on mainstream economy - State as market-fixing spender

Maximisation profit1)Positive externalities (not fully captured by the original investors)2) GHG (Greenhouse gas - are mispriced )

Mission Oriented Financing Innovation (Mazzucato, 2013) – State as lead market creating investors

Maximisation of private profit by state incentives1) High-risk, capital-intensive investments (e.g. Lenovo in China, 2) Iphone, Tesla cars in the USA)

Sector Examples

Energy sector The Energy Law (OG 120/12)

The Electricity Market Act (OG 22/13)

National renewable energy action plans (2014-2016)

Equipment Purchasing (e.g electrical car)

The Law on Energy Efficiency (OG 152/08, 55/12, 101/13, 153/13, 14/14

Options Involve Actors

An Integrated Framework for Supporting the Greeing of Industries,

Governance and Institutional Capacity

Government

Countinuing activities in the field of enabling environment

Enabling Condititons, Acts and Regulations

Government

Instruments Mixes to Support the Greeing of Industries

Various Policy Instruments, Information

Government

Harnessing Environmental Technologies Enabling conditions, Various Policy Instruments, Industry Engagement, Voluntary Action

Government and Industry

Industry Led Initiatives Voluntary Action by Industry Industry

Systematic acting only makes sense if there are objectivecircumstances, the threats that endanger its action (cf. Podunavac,Keane, Sparks, 2010: 26);

Planning and implementing activities preceded by the analysis ofits compatibility with socio-economic framework

Policy Planning Issues; Policy Implementation and monitoring issues; Policy Evaluation issues;

An Initialising phase - e.g. Aralica, Botrić, (2013) Evaluation of R&D Tax Incentives Scheme in Croatia;

The policy analysis in Croatia focused on the functioning of governmentalbodies instead of policy efficiency analysis (cf. Petak, Petek, 2009)

Institutional arrangements in the future are a key determinants of green industrial policy development in Croatia; Better institutional linkages between areas of activity (eg. Industry associated with the impact on social sectors eg. Environment); Effective links between supranational mechanisms (eg. EIF, ESF) national policy priorities; Regional cooperation as mechanism of promoting Green Industrial Policy ?