Trésor-Info - Publications de la direction générale du Trésor - Industry

Beyond Health Impacts: the Heavy Economic Toll of Air Pollution

2026-02-05T00:00:00+01:00

Air pollution is a major public health issue. Fine particulate matter is associated with more than 40,000 deaths each year in France. It also interacts with other pollutants to trigger or worsen many diseases affecting organs including the lungs, heart and brain. It is estimated to account for 20% of new asthma cases in children.

These health impacts carry a high socio-economic cost, related not just to direct healthcare expenditure (e.g. hospitalisation and medicine costs) but also to impaired quality of life and lost production due to sickness absence.

In addition to these effects on mortality and morbidity, recent research papers have shown that air pollution also affects cognitive and physical abilities, resulting in lower productivity. These impacts can be seen across a broad array of occupations not just involving physically demanding work, in agriculture and industry for example, but also involving a cognitive aspect, such as financial services, call centres, and even umpiring in sport.

In addition to these direct short-term impacts, air pollution may also be undermining future productivity by reducing academic achievement and hampering innovation.

The Swiss High-Price Island

2026-01-22T00:00:00+01:00

Switzerland has a reputation for being a particularly expensive country. The GDP price index is roughly 60% higher than the European Union (EU) average, creating what is known as a “high-price island”. This high cost of living affects consumption more than investment, and, within consumption, affects services more than goods.

The high-price island was not caused by recent inflation but rather structural factors dating back to the 1970s. It goes hand in hand with wages that are approximately the double of those in neighbouring countries. Above all, high price levels in Switzerland reveal a dichotomy in its economy.

While one section of the Swiss economy is heavily outward-facing, and its very high level of productivity has resulted in high wages, another section is focused on the domestic market, particularly the service sector, where there is little competition. To match the high wages in the competitive tradable sector, the less productive domestic sector has to raise its wages, resulting in a rise in the overall prices.

The Swiss model openly prioritises producers over consumers with an eye to promoting Switzerland’s economic and industrial position. The result is that certain sections of the economy are relatively closed off, with high levels of agricultural protectionism and a less demanding competition policy than the one underpinning the EU.

High income levels allow most of the Swiss population to benefit from very strong purchasing power. While Switzerland is certainly a high-price island, it is first and foremost an island of prosperity, driven by the success of its exports. Paradoxically, there is a lingering doubt as to whether this model is sustainable (i) without the continued support of targeted protection schemes and (ii) lower domestic competition.

Lessons from Past Industrial Policies

2025-02-13T00:00:00+01:00

Industrial policies aimed at the creation and development of specific sectors have made a comeback against a backdrop of a mounting number of crises, trade tensions, an accelerating innovation race and the imperative of combating climate change (see Chart on cover page). A study of policies in eight advanced and catching-up countries from 1945 to 2000 provides useful insight into the conditions determining their success or failure.

Industrial policy had similar aims in all countries studied: (i) growth and competitiveness; (ii) support for major transitions (energy, space, etc.); (iii) strategic autonomy and sovereignty; and (iv) support for declining sectors.

Although different models of industrial policy exist, most countries have intervened in a targeted manner in specific sectors. The catching-up countries (Japan followed by South Korea and China), France and the United Kingdom – up to the 1980s – directly intervened in the development of industrial production capacities. In the United States, sector measures were decentralised and limited to R&D support and government procurement in military and high value-added sectors.

The advanced countries’ sector-specific measures focused on emerging sectors with high stakes in defence- and sovereignty (aviation, energy and space in the post-war period followed, as in the catching-up countries, by electronics and IT). The catching-up countries initially focused on mature, but high-growth-potential mid-tech sectors (automobiles, chemicals and shipbuilding) and then on high-tech sectors (primarily electronics and IT).

International sector-specific industrial policy experiences provide useful insight for shaping today’s policies. For example, the success of both export aid conditional on performance in South Korea and the precise specification of ambitious technological goals in US development contracts suggests that setting high commercial and technological performance targets is a factor for success.