EU growth is below that of the US and China. It is also below most emerging market countries. There is a large productivity gap between the US and the EU, and innovation is slow. The response has been to see papers and discussions of what is going wrong, but very little work on what should be changed with real action.
A new paper, The Constitution of Innovation, discusses the EU problems and focuses on the missed opportunity from not moving to a more integrated market. Surprisingly, the paper suggests that much of the needed change can be done through the current structure. There needs to be greater enforcement actions to improve competition and fewer directives from the EC. A good idea is to allow a 28th regime that provides a pan-European structure for companies that want to grow their business across the entire EU. What is needed is a focus on EU growth within the current rule-making process, rather than a system of rules to protect entrenched interests. Cross-border activity is not a zero-sum game but can lead to gains across all of Europe.
While this is further afield from many of our blog topics, a dynamic EU will be good for world trade and the global economy, whereas the current status quo will only lead to falling living standards.
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