Further reforms and investment needed to safeguard jobs and recovery in Europe
A failure to implement fundamental reforms associated with encouraging competitiveness is putting job creation and Europe’s long-term economic strategy at risk, finds The Europe 2020 Competitiveness Report: Building a More Competitive Europe, released by the World Economic Forum.
Published every two years, the report aims to assess the progress of European economies in achieving the goals set by the EU’s Europe 2020 strategy to become a smart, inclusive and sustainable society. This second edition finds a Europe that has largely successfully dealt with the macroeconomic turbulence of the past half-decade, yet is enjoying mixed success in implementing reforms necessary to return the region to the top of global competitiveness.
Margareta Drzeniek-Hanouz, lead economist and director, World Economic Forum, said: “Europe as a whole has made significant strides towards maroeconomic stability. Now it is time for its leaders to address the long-term competitiveness agenda by implementing the right reforms and smart investments to drive productivity growth. There is no room for complacency, even for those countries that are currently performing well.”
In terms of Smart, The report corroborates Europe’s lack of progress in building a more innovation-based, knowledge-driven economy in comparison to other advanced economies. This category, which measures countries in terms of their record in building business-friendly enterprise environments, implementing a digital agenda, encouraging investment in innovation and optimising skills and training, also represents the widest gap between Europe’s most and least competitive economies.
While the EU fares well in providing the foundations for sustainable growth, the picture is more mixed for inclusive growth, says the report. Overall, EU countries continue to depict relatively cohesive societies, although many of them are failing to provide gainful employment opportunities for large shares of their populations.
Underlying the gap in competitiveness between Europe and other advanced economies is a deep-rooted competitiveness divide within the region that has proven stubbornly hard to narrow. This is in spite of impressive achievements by many of the more innovation-poor countries in adopting reforms necessary to achieve stable macroeconomic environments.
According to the report, there is no one-size-fits-all strategy for lifting competitiveness across all member states as national and regional characteristics all play a part in shaping Europe’s economic landscape. However, one common thread is the need for all nations to build institutional capacity and adopt governance mechanisms that will enable more effective implementation of competitiveness-raising reforms.
An important conclusion of the report is that in the long term, there are no trade-offs between building a competitive economy on the one hand and an inclusive and sustainable society on the other. Competitive economies tend to provide more and better opportunities for their citizens, creating more inclusive societies, and fostering further opportunities for innovation and building environmentally sustainable societies.
Nicholas Davis, director and head of the Europe team at the World Forum and co-author of the report, said: “Europe can create more and better jobs, support rising living standards and build economically sustainable societies. We hope this report will encourage business, civil society and political leaders at the European and national levels to collaborate to achieve these goals.”