{"id":7385,"date":"2025-03-11T16:51:37","date_gmt":"2025-03-11T15:51:37","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=7385"},"modified":"2025-03-11T16:59:06","modified_gmt":"2025-03-11T15:59:06","slug":"the-european-unions-priorities-for-strategic-independence","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2025\/03\/11\/the-european-unions-priorities-for-strategic-independence\/","title":{"rendered":"The European Union\u2019s Priorities for Strategic Independence"},"content":{"rendered":"

Europe has an uncomfortable task. It must balance two equally fundamental objectives: reducing emissions to zero and ensuring strategic independence in technology, which in turn supports the competitiveness of its industry. To achieve this, it must focus on three priorities, using the Draghi Report as a useful compass to guide its actions. Above all, it must always remember that no country can tackle challenges like these alone.<\/em><\/p>\n

 <\/p>\n

Globalization has profoundly transformed the global economy, driving an exponential increase in the flow of goods and people between countries. It has created a highly interconnected production system, in which a computer is designed in California and assembled in China with hardware and software components produced all over the world. It has allowed nations to capitalize on their comparative advantages, contributing to a significant increase in global income and lifting hundreds of millions of people out of poverty. However, it has also had negative consequences, which many economists\u2014traditionally supporters of open markets\u2014had underestimated.<\/p>\n

Unavoidable Questions<\/strong><\/h3>\n

In developed countries, migration flows and increasing income inequality have fueled the rise of populist and isolationist movements. Elsewhere, rising income levels have not been accompanied by corresponding democratic progress. China is the most emblematic case: an economic and technological powerhouse with an autocratic government that pursues a determined foreign policy.<\/p>\n

Interconnections that were created in a period of stability in international relations have now become a source of vulnerability, as we first experienced with the pandemic and then with the Russian gas blockade following the war in Ukraine. This has made some questions inescapable. What would happen if trade with China were to be completely interrupted? Can we still rely on the United States for technological innovation and defense, as we have done since World War II within an alliance framework? How can we ensure energy security for European households and businesses?<\/p>\n

Addressing these questions means grappling with the issue of strategic interdependence. This issue affects almost all economic activities but is particularly crucial for the green transition.<\/p>\n

The need to reduce carbon emissions and combat climate change is an unavoidable priority. However, the shifting geopolitical context makes this challenge both more difficult and more important for Europe. On one hand, many countries are scaling back their commitments to climate goals; on the other, dependence on foreign suppliers for both fossil energy sources and green technologies increases technological and economic vulnerability. Europe must therefore tackle a dual challenge: maintaining ambitious climate goals while reducing strategic dependence on foreign suppliers.<\/p>\n

From this perspective, increasing the production of renewable energy is a fundamental tool for achieving “energy sovereignty.”<\/p>\n

The Draghi Report as a Compass for Solving a Dilemma<\/strong><\/h3>\n

The green transition requires massive investments in two key areas: clean energy production and emission reductions in high-pollution industries. A prime example of the first case is solar panels, which are essential for increasing the share of renewable energy. An example of the second is the widespread adoption of low- or zero-emission vehicles to reduce environmental impact in transportation. The dilemma is clear: should we minimize costs or ensure a certain level of technological autonomy, even if it comes at a higher price? In an ideal world, technologies would be purchased at the lowest price, often from Chinese manufacturers. But this poses significant risks in terms of strategic security.<\/p>\n

The Draghi Report provides a taxonomy of different sectors, offering a useful framework for addressing this dilemma. Some sectors, in which Europe faces a high cost disadvantage but which have limited strategic importance, make it reasonable to import technology from abroad. Other sectors, however, are strategic, both in terms of employment and their essential role in the functioning of the overall economic system. In these cases, it is necessary to maintain a degree of strategic autonomy.<\/p>\n

Thanks in part to state subsidies, China\u2019s production of solar panels has reached unmatched efficiency levels. However, for Europe, the strategic and economic implications of relying on foreign imports in this sector are manageable. From an economic standpoint, the installation and maintenance of solar panels remain in the hands of local workers. Once installed, a solar panel lasts over twenty years, meaning that a sudden disruption of Chinese supply chains would not have catastrophic consequences for Europe. The conclusion is that this industry falls into the first category of the “Draghi taxonomy”: it makes sense to import solar panels from China, taking advantage of the implicit subsidy borne by Chinese taxpayers to boost renewable energy investments in Europe.<\/p>\n

The case of automobiles is different. Even in this sector, Beijing has reached a level of production efficiency that would enable large-scale electrification of the vehicle fleet at a lower cost than European manufacturers. However, in the EU, the automotive sector employs about 2.5 million workers, not to mention the indirect impact on supply chains. Outsourcing vehicle production entirely to foreign manufacturers would have enormous economic consequences. Moreover, losing all autonomy in vehicle production and maintenance poses an excessively high risk. It is therefore essential to preserve significant manufacturing and technological capabilities within Europe.<\/p>\n

Three Priorities for Strategic Independence<\/strong><\/h3>\n

Beyond these two examples, in order to secure strategic independence, Europe must set itself three priorities. First and foremost, it is essential to enhance its capacity to develop innovative technologies and translate them into competitive commercial products. Europe cannot remain a passive spectator in a two-player technological race between the United States and China. If the battle over solar panels is lost, that does not mean that it is not worth exploring new clean energy production technologies.<\/p>\n

This logic applies to green technologies, where Europe still holds a competitive edge over China and the U.S. in manyareas (see figure). But it also applies to other sectors where Europe currently lags behind. The most significant example is artificial intelligence: it is strategically essential for Europe to develop its own competitive capabilities in this field.<\/p>\n

 <\/p>\n

Europe\u2019s Position in Advanced Technologies (Green and Digital)<\/strong><\/p>\n

\"\"
Note: The results shown in the figure are based on a patent data analysis to assess the complexity and specialization potential in various technological fields. On the vertical axis, technologies are classified according to how advanced or complex they are, with scores ranging from 0 (less complex) to 100 (more complex). The horizontal axis (which represents “correlation density”) indicates how easily a country can build a comparative advantage in a particular technology, depending on how closely it is related to other technologies in which the country is already strong. The size of the bubbles represents how much each country has already specialized in a given technology, using a measure of “revealed comparative advantage” (RCA), which reflects their competitive strength in that field. Source: Draghi Report “The Future of European Competitiveness”.<\/figcaption><\/figure>\n

 <\/p>\n

European Industrial Policy: What Needs to Change<\/strong><\/h3>\n

A second key aspect concerns industrial policy. In a world where governments strongly protect and subsidize national production, the European Union cannot afford to remain passive. It is certainly crucial to continue defending multilateralism and promoting a trade system that remains as open as possible, but it is equally necessary to counter anti-competitive practices, such as the state subsidies that other countries grant to their domestic industries.<\/p>\n

The green transition inevitably imposes costs on European businesses \u2013 the carbon tax is a clear example \u2013 which put them at a disadvantage compared to competitors operating in countries with less stringent environmental standards. An appropriate response to these difficulties is the Carbon Border Adjustment Mechanism (CBAM), introduced by the EU: it imposes tariffs on imports of polluting products from countries that do not have a carbon tax, thus helping to restore fair competition. And it is positive that the Competitiveness Compass, published by the European Commission on January 29, 2025, as a guide for EU competitiveness policies, includes a review of CBAM to improve its effectiveness and extend its application to new sectors.<\/p>\n

Clear Rules for the Transition<\/strong><\/h3>\n

The third priority is ensuring clarity in the transition process in terms of regulations, deadlines, standards, and public investments. The state must also ensure the necessary infrastructure investments under its responsibility. In the current climate of uncertainty affecting the automotive sector, businesses are delaying investments and consumers are postponing purchases. The result is that 2024 will be remembered as one of the worst years for the European automotive industry. The sector will recover if public authorities provide guarantees and security regarding the transition path. Unfortunately, the opposing positions of political parties on the transition do not bode well.<\/p>\n

So far, I have not mentioned Italy. This is no accident. The economic challenges posed by the current international context require an ambitious response. It is worth repeating tirelessly: no single European country can face challenges of this magnitude alone. More Europe is needed, in the form of a common and clear industrial policy, shared investments in research and strategic infrastructure, and a unified voice in international negotiations.<\/p>\n

 <\/p>\n

Fabiano Schivardi is a professor of political economy at LUISS University and a research fellow at the Einaudi Institute for Economics and Finance, LEAP, and CEPR. His research focuses on industrial economics and corporate finance. He holds an ERC Advanced Grant (2020-2025) on industrial structure and European productivity divergence.<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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