Most American investors do not understand the European economic landscape, or we think we know it as a bureaucratic socialist leaning system which has been in a state of continued stagnation relative to the United States and Asia. This view of relative stagnant growth opportunities is a falsehood and a misunderstanding of what has been accomplished since WWII. The more recent history is a legacy of the earlier miracle but cannot be characterized with a simple view of just state domination.
The European economic model and history is well explained in The European Economy since 1945: Coordinated Capitalism and Beyond by Barry Eichengreen, a leading scholar of international finance and hisory. It is detailed review of the dynamic changes that have been seen in the European economic landscape. It is a comprehensive analysis of economic development over the last half century which dispels many of the myths of European development.
The economic story of Europe is actually a development miracle during the first half of this period. Part of this growth was the catch-up from the war, but it has also been a comprehensive approach of how to integrate ecnomics between different groups. Not all of the the countries took the same path but there was a common goal to get growth on track. It has been a useful set of policies driven by cooperation between labor, government, and business as well as a willingness to meld Europe into a single market.
The European miracle according to Eichengreen was possible because of the cooperative legacy between the three major economic players that existed before the war. Strong government intervention to promote growth was backed by labor and business to make Europe a success. This cooperative structure worked well during the period of reconstructive growth or catch-up. This structure of state directed cooperation did not do as well over the last 30 years when new technology and innovation were the hallmark of growth. The coordinated capitalism, however, led to European integration, a single currency, and strong improvement in standards of living.
The question is whether this historical model of coordination can be recast for a changing world economy. Prof Eeichengreen does not have an answer, but reading the history can give us a model and context for how Europe may behave in the future.
The European economic model and history is well explained in The European Economy since 1945: Coordinated Capitalism and Beyond by Barry Eichengreen, a leading scholar of international finance and hisory. It is detailed review of the dynamic changes that have been seen in the European economic landscape. It is a comprehensive analysis of economic development over the last half century which dispels many of the myths of European development.
The economic story of Europe is actually a development miracle during the first half of this period. Part of this growth was the catch-up from the war, but it has also been a comprehensive approach of how to integrate ecnomics between different groups. Not all of the the countries took the same path but there was a common goal to get growth on track. It has been a useful set of policies driven by cooperation between labor, government, and business as well as a willingness to meld Europe into a single market.
The European miracle according to Eichengreen was possible because of the cooperative legacy between the three major economic players that existed before the war. Strong government intervention to promote growth was backed by labor and business to make Europe a success. This cooperative structure worked well during the period of reconstructive growth or catch-up. This structure of state directed cooperation did not do as well over the last 30 years when new technology and innovation were the hallmark of growth. The coordinated capitalism, however, led to European integration, a single currency, and strong improvement in standards of living.
The question is whether this historical model of coordination can be recast for a changing world economy. Prof Eeichengreen does not have an answer, but reading the history can give us a model and context for how Europe may behave in the future.
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