Concluding remarks

The European countries are at a crossroad between either letting the Union dissolve or radically reforming it. Today's darkened geopolitical environment requires Europe to act as a whole. However, the EMU will remain fragile as long as it chooses to continue to delegate control over its policies to market surveillance. A true "Hamiltonian moment", which involves adopting a common fiscal policy in support of the common monetary policy is a matter of urgency.

We still have a long way to go. Divisions between member countries marked by opposition between debtors and "frugal" creditors, as well intra-country political struggles and conflicting interests, have - even in the face of this dramatic crisis - led to the paralysis of the European institutions, with the one exception of the ECB. Faced with what she sees as a serious threat to the EU's survival, the German Chancellor (and the Commission's president Ursula von der Leyen) have been driven to action. However, as we argued in Sect. 3, little can be expected from the NG plan for immediate support. The ability of the SP to emerge from the crisis will increasingly depend on its ability to take advantage of the greater flexibility of EU rules for an efficient use of industrial policy, helping companies and the whole economy to respond to the challenge posed by social and technological innovation, the restructuring of production and the reorganization and shortening of GVCs.

The pandemic will have significant repercussions on the international organization of production and GVCs (on this point, see also the contributions to this Forum by Strange and Coveri et al.). Indeed, the countries initially most affected by Covid (China, Korea, Italy) are among the most important suppliers of intermediate goods at the international level. Studies on the propagation of economic shocks triggered by natural disasters (such as the earthquake that hit Japan in 2011) along the value chains found significant supplier substitution effects. Anecdotal evidence signals numerous cases of supplier substitution in some countries as a result of the coronavirus. The extent of these effects depends on the degree of complexity of the production chains, which affects the degree of input substitutability. Propagation effects also depend on the presence of "hub" companies interconnected with a large number of supplier and customer firms. Future developments are uncertain, depending on the relative strength of two opposite effects. On the one hand, greater coordination afforded by digitalisation of production networks could favour substitution effects (especially in cases where value chains are less regionalised and the search for new suppliers is more difficult). On the other hand, processes of reshoring and shortening of value chains could occur, especially where production chains are less complex or automation is more advanced. The second possibility could represent an opportunity to reverse the processes of deindustrialization that have impoverished, above all, the productive fabric of the peripheral countries.

A third perspective, probably utopian, could contemplate coordination of coalitions of producers across EU member states. In a situation of strong productive complementarities between countries, the fortunes of the producers (workers and firms) in one country are bound to those in the other. This would call for a coordinated industrial policy at the European level aiming at ensuring a balanced development of the economies of its members through their integration in the European production networks. In emergency situations where production activities are reduced or temporarily suspended (as in the case of coronavirus shock), bilateral agreements (mediated by governments) between producers in different countries should aim at stabilizing employment levels and pre-existing supply contracts between firms through "mutualisation" of the required financial effort. After all, having surprisingly spoken out in favor of the Eurobonds, the CEO of Volkswagen Herbert Diess could - at one remove - be also supportive of such a project!