14 June 2013

ECFIN Economic Brief: Securing European competitiveness in a global perspective

Over the past two decades, European industry was holding its own against both the old world competition from the US and Japan and newer rivals from China or India. But already before the crisis, sluggish productivity growth and growing internal imbalances weighed on Europe's potential to face the overall challenges of globalisation, ageing populations, growing resource limitations and climate change. Thus, the task now is to inject new dynamism into our economies, while continuing with the necessary adjustment, rebalancing and private and public sector deleveraging.

A high-productivity strategy for competitiveness needs to be based on openness and innovation, with investment in R&D and in education and skill formation as major building blocks. Calibrated industrial policies within the Single Market framework should foster integrated energy and service markets and green investments. For the peripheral countries, the resumption of downhill capital flows and FDI is essential to re-ignite convergence and integration, with a lasting correction of imbalances requiring further competitiveness adjustments, improvements in the business environment and comprehensive public sector reform in many of them.

Full brief

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