Institut de Gestion de l’Environnement et d’Aménagement du Territoire

1. The final decline of Western European industries ? a very first attempt at structural explanations of the geography of the crisis in Western Europe Moritz Lennert “Geography of the Financial Crisis and Policy Response” Warsaw, 21-22 September 2009 Faculté des Sciences Institut de Gestion de l’Environnement et d’Aménagement du Territoire

2. Identiyfing the geography of crisis: a hazardous enterprise • Lack of real-time data • High inertia in spatial distribution of economic activity • Complexity of factors of localisation and of regional development => informed speculation based on historical and theoretical considerations

3. 3 basic hypotheses • Crisis is not financial, but structural crisis of overproduction/underconsumption • In Western Europe certain fordist industrial regions have survived • These regions are now the main loci of the crisis

4. A crisis of underconsumption • Paradigm shift as result of 1970s crisis: • Delinkage of growth of productivity and wages • Decrease of state intervention • Focus on recovery of profit rates -> investment -> jobs • First target achieved, but not the other two

5. A crisis of underconsumption Productivity gains and their distribution (annual growth rates) in France

6. A crisis of underconsumption Profit, investment and unemployment rates in Europe

7. A crisis of underconsumption • Reduction of real wages • Decreased investment rates • Decrease in consumption • Partially offset through • decrease in saving rates • increasing dependency on credit

8. A crisis of underconsumption Source: M. Husson: Les casseurs de l'Etat social, La découverte, 2003. Evolution of the proportion of wages in the total value added (France and EU). Adjusted wage share, whole economy (% of GDP) Source: Bayet A., 1997, Deux siècle d'évolution des salaires en France document de travail INSEE série verte, n°97-02.

9. A crisis of underconsumption Source: Bayet A., 1997, Deux siècle d'évolution des salaires en France document de travail INSEE série verte, n°97-02. Average yearly growth rate of the purchasing power of workers’ average net wages in France (%)

10. A crisis of underconsumption Source: Duménil-Lévy (2003), Le néo-libéralisme sous hégémonie Etats-Unienne. Source of data: NIPA (BEA). Share of savings in the available income of USA households

11. A crisis of underconsumption • Reduction of income + decrease in (public and private) investment => decrease of consumption • Lower GDP growth rates • Demand for high returns on financial investments => decoupling of financial economy (stock and credit markets) from « real » economy

12. A crisis of underconsumption Sources: Quid 2002, CAC40, OECD Stock exchange performances and profit rates

13. The survival of fordist industrial regions • Deindustrialisation in Western Europe • Decline of industrial regions • Some decline less: • Late (1960) fordist investments and development • Adaptation to demands for flexibility • Marshallian districts • Specialisation light, but also in medium to high tech industries

14. The survival of fordist industrial regions Source: Vandermotten Evolution of GDP of different types of regions

15. The survival of fordist industrial regions Source: ESPON Project 3.4.2 « Economy »

16. The survival of fordist industrial regions Source: ESPON Project 3.4.2 « Economy »

17. The decline of the survivors • Unemployment data only available • Test for three countries: Belgium, France, Germany • Comparison between 2007 and 2009 • Average of entire first semester/trimester • Rates or absolute numbers

18. The decline of the survivors

19. Conclusions • Picture not as clear-cut as hypotheses claim • Obvious data issues, including in comparability and sophistication of typology • Two main conclusions • industrial regions suffer most • metropolitan areas and their hinterland suffer least • New step in deindustrialisation of Western Europe ?