Photo: Jochen Tack / Reuters
Europe, predicted an industrial disaster if it does not replace a strategy to support local businesses in the fight against the American and Chinese competitors. About it writes Bloomberg.
As explained by the Agency, in an attempt to take a leading position in the global market the European authorities rely on targeted support of large companies and specific technologies. For example, they choose a major industry Corporation and claim it’s strategic. This then allows the company to claim financial support at the expense of taxpayers and to obtain various benefits.
However, such a policy harms more than it helps, because officials “are often confused size with strength.” As explained by the Agency, because of the actions of the authorities in the red are smaller companies, so called hidden Champions, which from the point of view of market success are often more profitable than large corporations.
Industrial EU strategy leads to inefficient investment of budget funds and the fact that the European authorities are violating the natural competition in the market. “They [European officials] believe that the best professional investors can determine which companies and technologies will be winners. But they are wrong. The market better defines the winners and always knows when the company loses and need to get out of its capital”, — writes the Agency. The officials in this situation continue to pour in losing positions “strategic Corporation” technology and money, wanting to keep them afloat.
Bloomberg notes that the European authorities need to move away from lobbying certain business or technology and focus on supporting the areas of fundamental research. The fact that scientists and inventors often do not know how to raise capital for their ideas, although their development would benefit the entire industry as a whole and not a separate company, says the Agency.
Video, photo All from Russia.