Table of Contents

Structural Challenges for Europe

Structural Challenges for Europe

Edited by Gertrude Tumpel-Gugerell and Peter Mooslechner

The main thrust of the book is that the sharing of mutual experiences is important for generating an acceptable policy mix, both at EU and national levels. The contributors highlight key financial issues, including the role of FDI and of foreign banks in the still ‘under-banked’ acceding countries, the re-launch of social security systems and the fiscal challenges of financing the catch-up process. They also examine the ongoing EU debate surrounding the application of the Stability and Growth Pact in Central and Eastern European Countries (CEECs) and go on to explore the contrasting evidence that some CEECs have shown more extensive privatisation efforts than some EU countries.

Chapter 1: The European strategy for economic and social modernization

Maria João Rodrigues

Subjects: economics and finance, money and banking


Maria João Rodrigues 1. COMPETITIVENESS AND THE KNOWLEDGEBASED ECONOMY New scientific and technological developments can only turn into competitive advantages, more wealth and new jobs in Europe if they are embodied in a different organization of economic activity. International comparison suggests that the European Union as a whole is not achieving this redeployment as fast as the United States, even if their paths have many specificities in common and will continue to do so. Since the beginning of the 1970s the European GDP per capita has fluctuated between 65 per cent and 70 per cent of the American benchmark of living standards. Although during the late 1980s, the convergence process seemed to be moving forward, it had slowed down again to 65 per cent in 2001 (European Commission, 2001e). This is explained by a new trend emerging very clearly in the USA: US labour productivity growth accelerated from an average of 1.2 per cent in the period 1990–95 to 1.9 per cent in the period 1995–2001. By contrast, labour productivity in the EU slowed down from an average of 1.9 per cent to 1.2 per cent between the same periods. What lies behind these contrasting trends? Several factors should be remembered here, even concerning productivity growth, which depends on the improvements of physical capital and of labour force skills, on technological advances and on new ways of organizing inputs. Nevertheless, a key factor of Europe’s recent under-performance in productivity growth seems to be an...

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