GOLDEN GROWTH
If they continue to improve their regulations, financial sectors, and infrastructure, countries in emerging Europe will keep benefiting from the successful European convergence machine. Southern Europe must also deal with its entrepreneurial deficit. Greater openness to the rest of Europe seems to be the solution for the laggards: importing firms, capital, regulations, and institutions from the most advanced countries would help Southern Europe grow in line with its peers. Northern and continental countries should fix their sights on enterprises in North America and East Asia. Maintaining their position at the frontier requires efficiency and an outward orientation. Future growth will require reestablishing the momentum for regulatory reform last seen in the mid-1990s and early 2000s, this time aimed at services. And it will require improving Europe’s innovation performance, addressed in chapter 5. For now, the answer to the main question asked at the beginning—are regulations an obstacle for enterprise in Europe?—is a qualified no. Outside the EU15 southern states, European enterprises have created jobs, added value, and generated exports over the last decade.
Answers to questions on page 187
Workers expect enterprises in Europe to create jobs, shareholders to generate value added, and governments to bring in sizable export earnings. In most parts of Europe, firms have taken advantage of greater regional integration to decentralize production, attract foreign investment, and expand the markets for their products. and Europe, industrial IIn Western W t d Eastern E t E i d t i l structures t t were better suited for a single market; Southern European enterprises have been slower to offshore activities and to attract foreign investors. In advanced European economies, many governments have to streamline regulations to make doing business easier; in emerging Europe, most have to improve infrastructure and credit as well. 226