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A NEW EUROPE? AN ECONOMIC REFLECTION ON THE
LISBON STRATEGY
Introduction

• Franco Mosconi
• Jean Monnet Professor
• University of Parma
• 17 March 2006

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Summary

• Prologue
• The Lisbon Strategy 2000
• The problems of the Lisbon Strategy
• Why has the Lisbon Strategy failed to fulfill our
  hopes so far?
• The Lisbon Strategy four years to the deadline
  (2006)
• The insight of Professor Alexis Jacquemin
• The European Industrial Policy Triangle

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I. Prologue

• For much of the 1990s, the intellectual and
  practical energy of EU was directed towards three
  goals

• The completion of the Single Market
• The launch of the single currency (EMU)
• The enlargement towards East Europe

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• However, in spite of fulfilling these
  institutional aspirations, at the same time the
  EU has exhibited unsatisfactory growth rates, as
  the Sapir Report made clear in 2003.

Table 1. Europes Growth Problem
Source A. Sapir, Enlargement and the
Competitiveness of European Industry, 2003.

• Prof. Faini will talk to us on the more recent
  economic trends in Europe.

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II. The Lisbon Strategy 2000

• Thus, launched in 2000, the Lisbon Strategy was
  intended to solve the European growth problem
  through

• Improving EUs competitiveness
• For example, by increasing RD spending up to 3
  of GDP by 2010.
• Reforming the European social models.
• For example, by incresing the employment rate up
  to 70 by 2010.

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III. The problems of the Lisbon Strategy

• But, the Lisbon Strategy has delivered much less
  than had been hoped for or that is necessary for
  renewing the European economy.

• Of course, as Aurore Wanlin will discuss in
  greater detail, there are differences in
  implementation among Member States.

• All in all, by way of illustration, consider that
  by 2003
• RD spending was only around 2,
• The employment rate was only 63.

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IV. Why has the Lisbon Strategy failed to fulfill
our hopes so far?

• Complexity and faulty implementation i.e
  methodological problems?
• OR
• Fundamental substantive problems?

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• Food for thought
• The problem with the Lisbon Strategy has to
  do with the lack of incentives to behave in
  accordance with its prescriptions that is, the
  lack of incentives to coordinate reforms within
  the EU.
• Prof. Jean Pisani-Ferry, Director of Bruegel,
  June 2005.

• We will have an in-depth analysis of our question
  when Dr. Colasanti and Dr. Canoy will talk to us
  about the Commissions thinking and experience in
  implementing the Lisbon Strategy.

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V. The Lisbon Strategy four years to the deadline
(2006)

• What can Europe do to improve its economic
  performance?

• Complete the Single Market
• Increase investment in RD and innovation

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• 1. Completing the Single Market

• The Single Market is the most potent European
  instrument to address the challenge of
  globalisation.
• André Sapir, Professor of Economics, Université
  Libre de Bruxelles, September 2005.
• Product and capital market reform at the EU
  level.
• Integration of the market for services a sector
  that today accounts for about 70 of EUs
  economic activity.
• The Bolkenstein Directive was rejected in March
  2005.
• Is the subsequent Service Directive, approved by
  the European Parliament in January 2006, a
  satisfactory compromise?

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• 2. Increase investment in RD and innovation

• Within this context, and among many other
  important issues (such as, creating centres of
  excellence), improving the competitiveness of
  manufacturing industries has emerged as a key
  requirement.
• During 1990s, there was a suspension of
  Industrial policy in Europe.
• Europe was making headway in completing the
  Single Market, launching the EMU and enlarging to
  the East.

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VI. The insight of Professor Alexis Jacquemin
Table 2. Labour productivity in EU-14
manufacturing industries relative to the US
(US100)
Source European Commission, 2003.
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• Going back to the 1980s
• There may be an need to formulate a concerted
  European industrial policy that will help
  overcome industry strategies along national
  lines.
• Alexis Jacquemin, The New Industrial
  Organisation, 1987.
• Examples of successful collborations in the past
  include Airbus, but also STMicroelectronics.

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• Jacquemins insight on the need for EU-level
  industrial policy is particularly valuable
  today, in light of

• the enlarged Union of 27 members, which provides
  new opportunities for pan-European industrial
  reorganisation
• and
• the resurging economic nationalism among the
  elites of some Member States.

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• Luckily, the Single Market has a strong guardian
  European companies themselves.

• The cross-border MAs that have spured
  governments to protect their strategic
  industries or national championsare a result
  of companies restructuring strategies in light
  of changes in the Single Market.
• Europes nationalists cannot reverse or
  perhaps even much affect the market-opening
  actions of their companies. But they may increase
  its costs.
• The Economist, 2 March 2006

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VII. The European Industrial Policy Triangle
1. Competition policy
2. Commercial policy
3. Technology policy
Source Conseil dAnalyse économique, by E. Cohen
and Lorenzi J-H., Politiques industrielles pour
lEurope, 2000.
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• The Industrial Policy Triangle
• Investment in knowledge and innovation is crucial
  in the modern knowledge-based economy.
• Thus, it is paramount that the EU reinforces its
  Technology Policy, to match the strength and the
  reach of its Competition and Commercial Policies.

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• The combination of a true Single Market (with all
  the industry consolidation measures it brings
  about) with an EU industrial policy concentrated
  in promoting research, innovation and
  knowledge-creation, sets the foundation for the
  creation of truly European Champions the future
  pillars of the EU economy in the modern
  globalised world.