Responding to the Economic Crisis - Fostering Industrial Restructuring and Renewal

OECD (9/18) – Across most OECD countries the global economic crisis has battered GDP, trade, and employment. The hardest hit industries include automotive and construction, where existing problems have been aggravated by the crisis. This report examines the impact of the global economic downturn on the long-term competitiveness of the automotive and construction sectors and explores how governments can support restructuring and renewal. In the automobile sector, ballooning losses already have accelerated the development of strategic alliances, which could contribute to more joint R&D and production platforms and a more effective division of labour.  As existing players restructure, new or emerging players may enter the market by meeting the demand for cleaner cars.

Governments have a vital role to play in the crisis, steering the shift toward more sustainable industries.  Stimulus packages can stimulate short-term demand while also fostering long-term growth.   Smart policy tools can strengthen the long-run potential of OECD economies while supporting industrial renewal.  They include seed capital funds, policies fostering entrepreneurship and start-ups, skills upgrading and training, and investments in capabilities for innovation.  Governments should avoid protectionist policies and all forms of aid that postpone needed restructuring.