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 6: Is the American Model Miss World? Choosing Between the Anglo-Saxon Model and a European-Style Alternative

Henri L.F. de Groot, Richard Nahuis, Paul J.G. Tang and John Fitz Gerald

Subjects: economics and finance, money and banking


Henri L.F. de Groot, Richard Nahuis, and Paul J.G. Tang1 6.1 INTRODUCTION ‘France had the seventeenth century, Britain the nineteenth, and America the twentieth. It will also have the twenty-first.’ That was predicted in 1998 in Foreign Affairs. The author, Mortimer B. Zuckerman, was jubilant about the American economic performance and saw a happy marriage of the new economy and the older American culture. Indeed, in the second half of the 1990s the United States productivity growth accelerated and employment expanded. The contrast with Europe was sharp. Most European countries experienced sluggish productivity growth and struggled with high unemployment rates. A cursory look at the data suggests that Europe has indeed a lot to learn from the US. Table 6.1 ranks the United States and European countries according to production per head of the population and shows the employment rate.2 Clearly, the United States is much richer than any of the European countries. The second on the list, Ireland, has approximately 10% less income per capita (from production) than the United States. At the bottom of the list are countries in Southern Europe that entered the European Union relatively recently. They are still significantly behind the European average. Not only is the United States richer, it is also better at providing jobs than most European countries. A few exceptions to this rule exist, though. Norway, Denmark, Sweden, the Netherlands and also Portugal can rival the United States in this respect. But, generally, the European welfare states lead 127 128 Competitiveness...

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