Instability in high-technology manufacturing industries

The EEC/EU's trade deficit in electronics doubled over the period 1987 to 1990, to reach 31 billion ecus. One explanation is not overcapacity but inefficiency as a result of exclusive procurement contracts (governments account for 15% of computer sales) and government subsidies, which means companies were slow to spot developments in private-sector markets. Pricing policy has also been questioned. High prices in Europe compared with the USA mean demand is sluggish and there is little incentive for product development. Other analyses highlighted lack of cheap capital, an inability to integrate several businesses into single firms, and poorly selected programme support areas.