State investment companies in Western Europe : picking winners or backing losers?

## Picking Winners or Backing Losers? State investment companies have become a major instrument of European governments in their pursuit of an 'industrial policy'. Often able to call upon people with substantial business experience, their grants of public funds are typically rationalised in terms of their ability to find potentially profitable companies overlooked by the private capital market. They pose, in an especially sharp form, the question 'Can governments pick winners?'. The studies collected in this volume give brief histories and assessments of the performance of state investment companies in Belgium, France, the Federal Republic of Germany, Italy, the Netherlands, Sweden and the United Kingdom. They disclose that there is little clear evidence of any ability to pick winners. State investment companies apparently spend most of their resources on propping-up losers. For proponents of industrial policy, a bird in the bush has been worth two in the hand. It has been easier to draw rosy pictures of the benefits to come in the future than to cope with the reality of a 'British Leyland' in the present. If the dearth of evidence for an ability to pick winners continues, then the debate about state investment companies-and industrial policy in general-must shift to the merits of supporting companies that are not going to provide an adequate return on the public Front Matter....Pages i-xxiv What is the Case for State Investment Companies?....Pages 1-24 Italy: Effects of Substituting Political Objectives for Business Goals....Pages 25-58 The Netherlands: Maintenance of Employment as a Primary Objective....Pages 59-95 Belgium: Politics and the Protection of Failing Companies....Pages 96-124 United Kingdom: An Experiment in Picking Winners—the Industrial Reorganisation Corporation....Pages 125-155 Sweden: Problems of Maintaining Efficiency Under Political Pressure....Pages 156-191 France: Enlisting the Aid of the Private Sector....Pages 192-226 West Germany: Managing Without a State Investment Company....Pages 227-262 United Kingdom: Pulling Dragon’s Teeth — the National Enterprise Board....Pages 263-281 Back Matter....Pages 283-293