Industry and globalisation

Responding to the Economic Crisis - Fostering Industrial Restructuring and Renewal

 

Download the report: Responding to the economic crisis - fostering industrial restructuring and renewal

 

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 July 2009 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 industry, demand has fallen rapidly as consumers and firms have postponed costly purchases. Many firms are struggling to remain competitive in an environment where competition, legislation and customer demand for more efficient cars and more value for money were already putting pressure on existing business models prior to the crisis.

Monthly production and demand for passenger cars in selected economies

Production 

 

New registrations (sales in the United States)

 


The construction sector is also faced with a considerable slump in consumer and investment demand.  From 2008 through the first half of 2009, fewer residential permits were issued in almost all OECD countries. Most countries experienced reductions of more than 10 percent; but several countries experienced drops of more than 30%.

Change in residential permits

The crisis has worsened overcapacity problems in both industries. 


However, the crisis also provides an opportunity for both governments and the private sector to transform these industries. 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.  In the construction industry, the growing demand for ‘greener’ buildings and more sustainable cities can foster innovation.


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.

 

 

 

Countries list

  • Afghanistan
  • Albania
  • Algeria
  • Andorra
  • Angola
  • Anguilla
  • Antigua and Barbuda
  • Argentina
  • Armenia
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  • Chad
  • Chile
  • China (People’s Republic of)
  • Chinese Taipei
  • Colombia
  • Comoros
  • Congo
  • Cook Islands
  • Costa Rica
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  • Cuba
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