Chapter 22: Innovation, Growth and Structural Reforms: What Role for EU Policy?
1 Reinhilde Veugelers EU GROWTH AND ITS COMPONENTS 22.1 GDP growth in the EU rebounded markedly in 2006 and 2007 (see Table 22.1). Although the financial market turbulence has seriously revised the economic prospects for 2008 downward, an important feature of the recent recovery in the EU is that both employment has increased and the decline in productivity growth has come to an end. This has raised the question of the extent to which this rebound was a purely cyclical phenomenon or is related to and reflects structural improvements, and especially improvements associated with the reforms of the Lisbon Strategy, the centrepiece of reform policy in the EU. 22.2 A STRUCTURAL REBOUND? Employment growth has been accompanied by widespread declines in unemployment and increasing participation rates, particularly of women and older workers. This suggests that the gains in employment were structural, consistent with labour market reforms aimed at bringing into and keeping more people in the labour market (ECFIN, 2007). But on the structural character of the labour productivity rebound, the empirical evidence is less clear. Since 2003, the rate of decline, which commenced in the mid-1990s, and is discussed at length by Encaoua (Chapter 21 in this Table 22.1 Real GDP growth rates 2004 EU-27 US Japan Source: 2005 1.9 3.1 1.9 2006 3.0 2.9 2.4 2007 2.9 2.2 2.1 2.5 3.6 2.7 Eurostat website: http://www.pro-inno-europa.eu, accessed March 2008. 315 316 The new economics of technology policy volume), has been halted and labour productivity growth has stabilized at...
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