Growing Business in Europe

Growing Business in Europe

by

Fernando de Melo and Giuseppe Zirilli

The European continent lagged behind Britain in industrial development for several reasons. First, the French Revolution and the Napoleonic Wars had caused a major upheaval in France, Austria, Spain, and Russia; no nation can pay much attention to its domestic economy when it is embroiled in war. Second, the European powers distrusted one another; the Congress of Vienna did not do away with important political and territorial rivalries. Third, tariffs restricted free trade among European nations; this in turn restricted markets for goods. Last, the men of Britain’s thriving mercantile middle class had a certain amount of political influence because they could vote for their representatives in the House of Commons. Representative governments like this were still very rare on the European continent; hence the continental middle class, which sup- ported industrialization, had much less power and influence. The Industrial Revolution on the continent began in Belgium. This small nation at the northeastern corner of France was, like Britain, rich in the coal that was necessary for industrialization. Geographically, Belgium and Britain were separated only by the narrow band of the English Channel, and British production techniques found their way across with relative ease, despite British attempts to keep their mechanical secrets for their own profit. The Cockerill family settled in Belgium around 1800 and began to build spinning equipment and machinery. By 1830 they had created a major manufacturing industry. Naturally, their success inspired imitators, and Belgium soon had a thriving economy. From Belgium, industry slowly spread throughout Europe. National borders shifted throughout the nineteenth century, so industrial development is best thought of in regional rather than national terms. Industrialization depended largely on the location of natural resources. Technologies were changed in areas where the resources did not match the British model. For example, the Mediterranean region was not rich in coal; therefore, French and Italian factories tended to rely on waterwheels and water turbines. Additionally, the sheep of southeastern Europe were not the same types that thrived in Britain. Their wool had a finer texture and could not be spun and woven on the same kind of equipment used in the British mills. The engineers of Spain and France showed their ingenuity by modifying the machinery to suit the needs of their raw materials. The railway was also slower to develop in Europe than in Britain. By 1848, however, several major railways crisscrossed Europe, particularly in Germany, northern France, and Austria. By 1870, most of the continent—even the less accessible regions such as southern Italy—was linked by railways. It was possible to travel all the way to Russia by train. The governments of Europe had originally hoped that extending the rail- ways would bring industrialization to areas that were less far along technologically. By midcentury, they had become well aware of the enormous profits to be made in mass production of goods. However, the railway proved an ineffective means of stimulating industry; its greatest usefulness was in linking the areas that were already industrialized, which was a great aid in shipping and international trade. By 1860, Britain’s industry was entirely modernized. On the continent, Belgium, France, and Switzerland had made the most progress toward mass production. However, things would change in the second half of the century. Generally speaking, the nations of northern central Europe had the most industrialized economies and those in southeastern Europe the least, with Spain, France, and Italy occupying a position somewhere in between. Industry affected the German economy more than that of any other nation. By the outbreak of the First World War in 1914, Germany had surpassed the rest of continental Europe in production. In 1890, Britain had produced twice as much steel and mined twice as much coal as Germany; by 1914, Germany’s output of both coal and steel was double the British amount. Industries differed in different nations depending on their manufacturing traditions and on the raw materials available to them. Major coal-mining industries sprang up in central France, in Belgium, and near the major cities of Krakow, Leipzig, Hanover, and Vienna. In Italy, Milan was a major center for textile production and engineering. The latest publication of the European Commission reads: «Setting up an SME is just the beginning. If SMEs are to have a significant impact on Europe’s economy, they need to grow bigger — take on more employees, and expand their product ranges, markets and turnover. In many cases, the skills and experiences of an entrepreneur are not necessarily sufficient to grow the business to a much larger size. Further stages in the company’s development require, amongst other things, new technologies and the know-how to implement them, new staff, with additional skills, and access to new markets. And of course,financial investment is a major requirement for growing a firm, as is often face-to-face advice and support and help inaccessing new markets. Certain groups in society, for example women, people from ethnic minorities and young people, face additional difficulties in trying to set up and run businesses, and special attention is given to helping overcome these. The Commission is working in close co-operation with the Member States to make the business environment friendlier, both for existing SMEs and for any prospective entrepreneur wishing to start a firm. In many cases, the Member States and the Commission work together in identifying and exchanging good practices. All the actions supporting SMEs and entrepreneurship have a unique and comprehensive framework which is the Small Business Act for Europe (SBA), which Member States have committed to implement alongside the European Commission. The latest Commission study on «Business Dynamics»: measuring the impact of non-efficient transfer of businesses on job creation and business births in Europe, is now available». In this paper, we will examine the role of the so called SBA and other mechanisms to boost the European environnment for small businesses.

09/01/2013 - Vice President Tajani presents the European Entrepreneurship Action Plan in Brussels © European Union

Europe’s economy cannot survive in a sustainable way without a strong and profoundly reshaped industrial base. New technologies have dramatically changed our life and our economy in the past 20 years. Political systems collapsed, new players emerged on the markets, as well as new materials, new technologies and workers who are better skilled than ever. The wind of change is blowing at a time when Europe is facing a severe economic and social crisis. But this situation and the changes are also an opportunity. Politics should play its part in seizing it, aiming straight at a new industrial revolution. We cannot let our industry simply leave Europe. It is a significant contributor to the real economy producing real values. Now, all efforts need to be undertaken to secure a modern, resource efficient, competitive and robust industry in Europe. Along with the need to create new jobs and boost our competitiveness, we have to tackle other vital challenges: the ageing of people in Europe whilst the world population is growing; increasing pressure on raw materials and energy supplies; the need to counter climate change and preserve ecosystems. Therefore we need an industrial revolution.

The new industrial revolution – The vision

The new industrial revolution should lead towards the gradual substitution of hydrocarbons as our main source of energy, and towards a more efficient and sustainable use of our resources. More in general, our economy as a whole is going through major transformations, with new production techniques based on digital technologies, advanced materials, key enabling technologies, space, robotics, renewable energy, recycling and reuse of raw materials. This revolution will affect many economic sectors: manufacturing, services, energy, raw materials, transport, construction, and chemicals; and it will be accompanied by technological innovation and the creation of new professional figures, such as:

  • New materials and nanotechnologies can provide adequate substitutes to rare earths and make renewable sources of energy less expensive and more efficient and we can reuse wastes as new sources of energy.
  • Making the electric car a mass consumption good, with costs and performances comparable to those of traditional vehicles, but with 0 emissions as they will use renewable energy.
  • Buildings can dramatically consume less energy and become producers of energy.
  • Thanks to developments in the space industry, our transport and electricity transmission systems will be «smarter».
  • The factories and the cities of the future will impact less in terms of emissions, but provide a higher living quality and higher job satisfaction.
  • Digital technology, creativity and design will revolutionize the production of goods and services.
  • Innovations in the chemical sector and biotechnologies are the only way to create sustainable and competitive biofuels.
  • We will have many new small economic players, new entrepreneurs running smart start-ups, as they will provide the creative power, the ideas and innovations which we need to speed up the transition to the Third Industrial Revolution.
  • Europe needs to exploit the business opportunities resulting from the transition to a more sustainable, resource efficient and low carbon economy. In particular, we need to ensure that industrial, climate, energy, environmental and other relevant policies provide consistency, coherence and certainty and create the right conditions for innovation.

Green technologies: Big opportunity for European firms

The global market for green technologies represents a big opportunity for European firms. Currently, the global market for environmental goods and services is estimated to be around €1000 billion per annum — and this is expected to double or even triple by 2020.

Europe produces some world leading eco-technologies. Our core environmental industries that are active in the fields of pollution management and control, waste collection and treatment, renewable energy and recycling have a combined turnover of over €300bn; provide more than 3 million jobs, and have an impressive overall global market share of approximately 1/3rd. This sector is offering many new and skilled green jobs and exploiting first mover advantages. And as European industries have to thrive or strive in the global arena the external competitiveness implications of our actions are also crucial.

The global market for green technologies represents a big opportunity for European firms. Currently, the global market for environmental goods and services is estimated to be around €1000 billion per annum — and this is expected to double or by 2020.

But neither Europe nor industry can do this alone. In a globalised world, we have to be realistic and reasonable about our industry’s potential contribution to worldwide environmental improvements. The EU is working hard to obtain ambitious and effective outcomes in Rio+20 and in climate and other relevant negotiations. Each region’s responsibilities and priorities are different but as we share the planet, we must all be part of the change we want.

It is encouraging to see that in Europe significant decoupling of economic growth and environmental impact has already been achieved and is continuing. Policies like Ecodesign are driving this change and helping to deliver more sustainable, products, production and consumption. Corporate Social Responsibility is also a flexible and effective way to encourage companies to do the right thing for societies and the planet — think partnerships instead of polemics.