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VoxEU @ CEPR @voxeu.org · 25/06/2025

#EU manufacturing broadly outperforms the rest of the world in #productivity terms, but the industries in which it specialises are not always those in which it is relatively more productive. Policy should target weak #trade sectors. F Di Mauro, M Matani, G Ottaviano cepr.org/voxeu/column... #EconSky

Chart showing the EU vs US: Relative state of technology by sector. The EU leads the US technologically in food products and wearing apparel.

Amid geopolitical shocks, the EU is revisiting its industrial strategy. However, traditional metrics often paint a misleading picture of Europe’s underlying strength. This column uses a new approach to measure the EU’s relative state of technology in different sectors. It shows that although EU manufacturing broadly outperforms the rest of the world in productivity terms, the industries in which it specialises are not always those in which it is relatively more productive. It argues that industrial policy must be rooted in productivity diagnostics and support should target sectors with strong relative state of technology but weak trade performance.