The Draghi report provides a set of policy idea that will support stronger growth and productivity, yet the problem of EU productivity is not a recent phenomenon but a problem that has existed for decades after the productivity catch-up miracle of post-WWII. This problem is well-documented in "The Lack of European Productivity Growth: Causes and Lessons for the US", "Labour productivity growth in the euro area and the United States: short and long-term developments", "Keeping Up with the US: Why Europe’s Productivity Is Falling Behind", and "Productivity growth in Europe: low, uneven and slowing". For the period of 1996-2109, US labor productivity per hour increased at 2.1% while EU productivity was only 1% per year. The cumulative effect is huge.
There are large differences in productivity across the EU, but the overall level is still consistent with Japan and the UK. It may not be that EU is doing something wrong, it is, but that the US is doing something right. This means that there is opportunity to copy US policies but there is also a problem that the EU is not able to differentiate itself versus other parts of the world.
One of the key differences between the US and EU is that in the EU there is less investment in new technologies and low levels of spending on R&D and R&D spending that is focused on auto manufacturing and less on new technologies.
No comments:
Post a Comment