Many regions in Europe and across OECD countries have a long experience with industrial change and the uneven impact it can have on economic development. Historically, industrial change has always given rise to new jobs, while the productivity growth from automation has been the most important driver of rising living standards. Yet, industrial transition also poses clear challenges. Changing economic patterns can cause temporary, but possibly prolonged, increases in unemployment, which are often spatially concentrated. Furthermore, the changing demand for particular skills affects wage levels and causes permanent gains or losses for certain groups of workers. Globalisation, technological progress, and the transition to a climate-neutral and circular economy raise additional challenges in these contexts, but can also offer important opportunities.
Regions in industrial transition have a comparatively strong potential to seize the chances offered by current megatrends (e.g. digitalisation and automation) to revive economic growth and productivity, and to improve resilience to future technology shocks. These regions often have a strong legacy in manufacturing and sophisticated innovation activities in local core industries. Well-trained workers, established knowledge and strong social capital long characterised them as engines of growth and prosperity. At the same time, these regions can face specific challenges, notably where deindustrialisation has been associated with a lack of an appropriate skill base for future-oriented occupations and low levels of productivity outside traditional technology fields. Across OECD countries, the share of tertiary educated differs on average by 20 percentage points between those regions with the lowest and those with the highest share in a given country. Even though regions in industrial transition do not necessarily have the lowest share in a country, they tend to be below the national average, implying a significant potential for increases. When there is a lack of skilled labour, it can become very difficult to attract the investment necessary for broad industrial modernisation or increased economic activity in higher value added services.
Successful industrial transition will depend on the ability of a region to foster “high-road competitiveness” strategies – in other words, its ability to foster innovation-led growth and ensure that the benefits from growth are widespread – spatially and, more generally, across the population. Seizing the opportunities of industrial transition while mitigating its social costs locally will require policy interventions that build on each region’s existing capabilities and legacies. Concerted action is needed by both governments and the private sector to successfully move industrial transition forward.
