What does industry mean for the economy?

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Industry is a fundamental driver and opportunity for the economic and social growth of nations; let’s see how important it is for the economy

Industry and economic growth are two concepts that have gone hand in hand since the dawn of the first industrial revolution in the 18th century and that acquired even greater significance after the end of World War II, when industry emerged as the main bulwark of global social and economic growth, especially in Western countries. This great importance stems from, among other things, its tremendous capacity to generate technological innovations, with all the improvements in people’s quality of life that this entails; the quality of its jobs, whose stability and remuneration are above average; and its effect as a driving force on the other productive sectors.

Although this is reflected in the history and economics textbooks of any faculty, the crucial role of industry is more alive than ever. As the European Commission puts it, industry is “a key driver of productivity and innovation” and “a cornerstone of economic prosperity in Europe”. Economies of countries such as the Czech Republic, Slovakia, Germany and Poland are those with the greatest industrial contribution to GDP, with figures of well over 20%. This results in these economies being more export-oriented and, therefore, their balance of trade is more sustainable in the long term.

Nevertheless, European industry has not been immune to the phenomenon of globalisation, and in recent decades it has witnessed first-hand the relocation of a large part of its production to developing countries, as well as a diminishing significance in comparison with the services sector, which has experienced a boom. This dwindling importance has meant, in many cases, the destruction of millions of jobs, as well as a loss of competitiveness and innovation in many of the economies that have undergone deindustrialisation processes, especially significant in the countries of southern Europe.

For many years now, a large number of institutions, social agents and private associations have led the way in trying to secure a renewed commitment to industry. This is why, at the beginning of the last decade, the European Commission launched the Europe 2020 Strategy, whose 10-year target was for an intelligent, innovative and sustainable European industry to account for 20% of the European Union’s GDP; something that has not been achieved except in those regions and countries whose commitment to industry has never ceased.

Commitment to industry, the great opportunity for economic recovery and growth

Therefore, it can be said that today’s industry, so far removed from the misleading image of a pollutant heavy industry in the early 20th century, is on an unprecedented path of modernisation and revitalisation which, moreover, looks set to play a fundamental role in achieving society’s main goals. A path marked by major challenges such as the European Green Deal, which aims for a climate-neutral 2050 in which European companies lead the world in clean products and technologies.

Reconverting our society towards this more sustainable model requires a commitment to industry in sectors such as capital goods (electricity grid), energy (renewables), transport (electric vehicles) or telecommunications (communication networks and digitalisation); sectors where an industry with a model of commitment to research and innovation would reinforce society’s shift towards a responsible model; bringing about a new industrial wave and creating hundreds of thousands of stable quality jobs.

With things as they are, European industry, a world leader in high value-added and highly sophisticated products and services with low carbon emissions, needs strong institutional support to adapt to today’s challenges and thus seize the huge opportunities afforded by the new industrial era. A new paradigm in which economic, social and environmental transformations, driven by digitalisation, automation and energy efficiency, are transforming traditional manufacturing processes.

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