Chapter 1: The European strategy for economic and social modernization
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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