The Hindu Business Line : New strategy to boost competitiveness of EU

A MAJOR epoch making policy overhaul is currently in offing, as European Union officials are working on a new strategy to contain underlying quest of all Europeans for economic growth, job creation and above all, boost competitiveness of European companies in manufacturing and service sectors.

All this is now at the forefront of latest EU's economic agenda as officials attempt a "simplification" move of the Lisbon Agenda, which highlights European Union's economic and fiscal strategic goals.

The recently expanded European Union has 25 member states with a population of some 450 million citizens and is widely rated as the world's largest and most affluent common market. There are wide economic disparities — say between Germany and recent new members from former communist ruled countries, who till 1989 were in the orbit of now defunct Soviet Union.

The current strategy is to ensure equalisation of economic opportunities and further consolidation of common values based on principles of multi-party democracy and free market economy, highlighted by governance based on rule of law.

The Lisbon Agenda was launched five years ago by the EU heads of government when European Union comprised only 15 member states. "All that is now a bit antiquated in wake of unflappable pace for globalisation and Europe is now facing fresh competitive challenges from the US, Japan and emerging marking of Asia — China, India and ASEAN economies in particular" - as an European observer put it.

The economic growth in the European Union at below two per cent per annum is modest and the level of unemployment is hovering at little below 10-per cent mark. The immediate prospects of boosting economic growth and reducing unemployment also look "sadly depressing." Hence, the ambitious Lisbon Agenda has been discredited by "its ever expanding number of targets and failure on part of the European Commission to tackle structural reforms."

This is not only confined to the European Commission but Chancellor Schroeder's coalition government in Germany has yet to launch a major initiative to usher in structural economic reforms. Germany is the world's third largest economy after the US and Japan and often rated as the "locomotive economy" of the European Union. Hence, the European Commission also wants individual EU member states to pledge to reform. France and Britain - the second and third largest economies in the European Union - have taken some initiatives "but the progress is not substantial."

The European companies are called upon to invest more on research and development in order to boost knowledge and innovation to make the EU region a better location for business and investment.

The young graduates are now encouraged to set up their own small-scale businesses and avoid dependence on "cushy and secured" jobs. But risk-takers are a rare breed in the European Union and recent opinion poll on both sides of the Atlantic revealed that the Europeans remain consistently less entrepreneurial than the young Americans. Of 21,000 people interviewed, 61 per cent of the Americans displayed preference to set up their own businesses compared to only 45 per cent Europeans.

It is also ironical to note that young immigrants, particularly from India, prefer to set up their own companies and businesses. It is often argued that in the job markets there is too much competition laced with tinge of racism and hence, immigrants are at a disadvantage. On the other hand, the European banks and financial institutions are eager to covet new business from creditworthy young entrepreneurs.

According to the Lisbon Agenda, EU would like to emerge as the "most competitive economy" in the world by 2020. At best, this is an utopia and in revised policy projections this theme has not been repeated. The final version of the new strategy will be presented by Mr Barroso, President of the European Commission, and Mr Venhegen, Industry Commissioner (Minister).

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page