Competitiveness and Growth in Europe

Competitiveness and Growth in Europe

Lessons and Policy Implications for the Lisbon Strategy

INFER Advances in Economic Research series

Edited by Susanne Mundschenk, Michael H. Stierle, Ulrike Stierle-von Schütz and Iulia Traistaru-Siedschlag

This book contributes fresh theoretical and empirical evidence on competitiveness and growth in connection with the commitment made by European leaders at the Lisbon Summit in 2000 to ‘render the European Union the most competitive and dynamic knowledge based economy in the world by 2010, capable of sustainable economic growth, with more and better jobs and greater social cohesion’.

Chapter 1: Competitiveness and Growth in Europe: An Overview

Susanne Mundschenk, Michael H. Stierle, Ulrike Stierle-von Schütz and Iulia Traistaru

Subjects: economics and finance, money and banking

Extract

Susanne Mundschenk, Michael H. Stierle,* Ulrike Stierle-von Schütz and Iulia Traistaru At the Lisbon Summit in March 2000, Europe’s heads of state and government declared their ambition to make the European Union (EU)‘the most competitive and dynamic knowledge-based economy in the world by 2010, capable of sustainable economic growth, with more and better jobs and greater social cohesion’. This broad objective includes an increase in the employment rate from an average of 61% in the EU to 70% by 2010, or 20 million additional jobs, and an EU average annual real growth rate of 3%, considerably higher than the average of 2.1% over the past ten years. To achieve this, the European Council adopted the Lisbon Strategy, an agenda consisting of short-term political initiatives as well as medium and long-term economic reforms aimed at achieving higher economic growth and employment, better environmental protection and increasing social cohesion. These measures aim for an increase in education levels and total spending in research and development from 2% to 3% of GDP as well as the completion of the single market with liberalization of telecommunications and electricity markets, as well as financial services. Recent growth theories suggest that government policies may play a role in fostering efficiency and growth. According to endogenous growth models government intervention can raise the level of efficiency in the economy by addressing market failures, externalities and spillovers that prevent optimal allocation of resources. In particular, these models uncover the role of positive externalities associated with public...

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