US putting EU economy into touch
Tuesday, 10 Oct 2006 08:37
The EU's lack of a dedicated single market is harming its global chances, the report's authors claim
The US economy is continuing to outperform and outstrip its EU counterpart, a new report claims, despite a concerted innovation drive from the latter.
Today's study from the Centre for Economic Performance (CEP), part of the London School of Economics, says that US productivity in terms of GDP per hour is 15 per cent higher than in the EU.
When translated into GDP per capita, the US economy is about a third more productive than that of the European member states.
The report's authors write that the post-war period was marked by economic recovery across Europe and the formative EU, but ever since the mid-1990s, growth in the US' economy has seen the continent playing catch-up.
EU leaders' response was to launch the Lisbon agenda in 2000, which had the aim of improving innovation and fostering an enterprise culture across its member states. More specifically, it laid guidelines for research and development spending to equal three per cent of GDP by the end of the decade.
The agenda aimed to make Europe the "most dynamic and competitive knowledge-based economy in the world, capable of sustainable economic growth, with more and better jobs, greater social cohesion and respect for the environment", the report authors write.
But the Lisbon agenda has largely been a failure, today's study contends, due to the recalcitrance of EU members to liberalise their products and labour markets.
The CEP report says that the EU should create a community patent to help drive innovation, and more simply because the process of patenting is five times more expensive in Europe than in the US.
"The creation of a liberalised financial sector, a single European market and a community patent will also contribute to making Europe more innovative," the study says.
"In general it seems that the goals of the Lisbon agenda have been lacking a coherent strategy. The open coordination method and best practices have not been enough of a driving force. There needs to be more rigorous and efficient delivery and strict evaluation of what countries have achieved."
In addition, the CEP report authors say that the brain drain experienced throughout the 20th century, which saw intellectuals and scientists travel to the US in search of better career and more lucrative opportunities, remains an extant phenomenon.