How America out-deindustrialised Europe
Europe is over-regulated, over-taxed and over-burdened by ageing factories, while America is dynamic and high-tech – this is the common narrative about the state of industry today. And the US has de-industrialised more than Europe. Between 1995 and 2022 manufacturing as a share of GDP fell by nearly six percentage points in the US (to 11.5 per cent) compared to only three in Europe (to 17 per cent).
But the how the two deindustrialised reveals a more complex picture. Demand shaped the US story, driving spending from manufacturing to services. In Europe, some industrial economies like France, Sweden, Belgium and Finland mirrored this demand-led shift. But the bloc’s integrated value chains – or “factory Europe” – has helped the continent avoid the trade-driven deindustrialisation in America.
Breaking down America’s path to deindustrialisation into three elements and looking at recent trends in EU industrial policy, Richard Baldwin, Saul Estrin and Bob Hancké challenge the popular story of European rigidity and American innovation.
