The secret lies in the industry

The complex situation in Europe coincides in the Basque Country with a large number of leading companies with the capacity to invest.

Wherever we look, whether it is the way we move, the way we generate and use energy, or the way we communicate and interact with others, we see the emergence of highly disruptive technologies. Autonomous and intelligent vehicles that understand infrastructure and need no human intervention to navigate without polluting, systems that generate abundant, unlimited and emission-free energy, or smart machines that design and act like humans are no longer mere chimeras.

I wonder how the Basque Country will fare in this transformation scenario: will it lead to better living conditions and higher levels of welfare, or will we be among the losers? This is not an idle question because, as Daron Acemouglu, the recent winner of the Nobel Prize in Economics, reminds us, technological improvements do not necessarily lead to win-win situations for everyone, and there are many examples in history to show this.

There is no doubt that the strength and global competitiveness of the Basque industrial sector are the factors behind the growth of its per capita income (16.8% above the European average), the maintenance of enviable wage conditions and the establishment of a welfare system and social guarantees comparable to those of the most developed countries. These are not insignificant achievements for a territory of just over 2 million inhabitants on the periphery of Europe. The crux of the matter is whether we will be able to carve out a niche for ourselves and continue to play a relevant role in this new industry, which will produce very different products from those we have today, the details of which we do not know, but we do know that it will be much more intensive, driven by technology and innovation, increasingly dematerialised and carbon neutral.

In the Basque Country, we know very well that our industrial development has not fallen from the sky, nor has it been the result of the invisible hand of the market, due to our innate conditions. It is the consequence of a solid social commitment and dedication that has allowed the articulation of a powerful but complex network of public and private institutions whose mission is competitiveness, and which are the result of a proactive and differentiated industrial policy that has been implemented and maintained for many years, despite the difficulties and often against the tide.

At this point I have two pieces of news to give you: one good and one bad. Starting with the latter, I would like to tell you that having come this far does not guarantee that we are in an advantageous position to deal with the drastic technological changes that are already upon us and that are increasingly threatening our ‘status quo’. In fact, I sincerely believe that it is to our detriment, because it floods public discourse with a malignant complacency that paralyses us. This is the antipode of the situation we had in the 1980s, when our socio-economic system was completely ruined and we had no choice but to restructure and re-industrialise the country.

The good news is that the complicated situation that European industry is experiencing coincides in the Basque Country with the presence of a business fabric with a large number of leading companies with investment capacity, the implementation of innovative cooperation instruments such as the Finance and Investment Cluster, and the proven ability of Basque agents to attract ‘next generation’ European funds. Not forgetting that this moment coincides with the start of a new term of office for the Basque Government, which has set itself the challenge of “making a qualitative leap forward and positioning the Basque Country as a spearhead of reindustrialisation in Europe”.

There is no doubt that the score is the right one to maintain the competitiveness of Basque manufacturing at the crossroads of the transformations that lie ahead. Now it is a matter of fine-tuning the orchestra to keep alive the vision of the industrial region we want to be, of using new instruments to motivate public and, above all, private investment, and of activating an institutional and social environment conducive to productive activity in this new phase of Basque industrial policy.

There is no magic wand, but it is a big step forward to be able to recognise the need for change, to have clear aspirations and to get down to the business of identifying and pulling the right levers. Because let’s not forget, the secret is in the industry.

This article by Iñaki Barredo, Chief Economist at NAIDER, was originally published in El Correo.

^{Illustration: Patrick Hendry, Unsplash}