CHAPTER 8
periphery, as it will be ever clearer that integration’s benefits will accrue disproportionately to countries that make their people and enterprises better suited for a Greater Europe.4 As European societies accept and act on the reality of aging populations and demographic decline, Europe’s appeal as a caring society will make it more competitive in the global market for talent. The 45 countries covered by this report have—to differing degrees—three assets: the European Union’s single market, momentum for regional integration, and Europe’s considerable global economic influence. Europe should play to its strengths by investing in these assets and reaping the returns. Growth will be the natural outcome of measures to do the following: · Deepen the single market, perhaps the European Union’s biggest achievement and its most valuable institution but one which, like the euro, “is unfinished business” (Almunia 2008). · Expand regional economic integration, a goal with a consensus unprecedented in European history and unequaled in the world today. · Strengthen Europe’s global economic leadership. A region that generates a third of the world’s annual output does not have to relinquish this position. This chapter concludes the report, pulling together the lessons from earlier chapters by matching policy priorities in each principal activity—trade, finance, enterprise, innovation, work, and government—to these three objectives. Chapter 1 shows how these activities are organized uniquely in Europe. To analyze intra-Europe differences in these components of the growth model, chapters 2 through 7 separate them somewhat artificially. Because they are interrelated, however, this chapter recognizes these relations, and collates policy priorities. This chapter makes explicit what is needed to address the three tasks Europe has to get done: get the most of the service economy; close the two productivity gaps that have opened between the EU15 and the United States, and within the EU15 between the north and the south; and adjust to demographic changes and an aging society. This chapter identifies what needs to be done, using the experience of successful countries in Europe and elsewhere to suggest how these changes can be made. Europeans want growth to be smarter, kinder, and cleaner. It is common sense that to accomplish this, Europe should build on its uncommon strengths—the single market, regional integration, and its global economic heft. The findings in chapters 2 through 7 identify the most effective measures for reviving and sustaining European growth (table 8.2). To make the single market more efficient, they focus on the trade in services, which requires facilitating the trade in digital services and harmonizing regulations across countries, and labor mobility within the European Union. To realize the benefits of greater European integration, the European Union’s existing members and its candidate and neighborhood countries have to expand production networks, attract foreign investment, and better manage financial linkages. They also need to reform public services and labor markets to stay fit for an integrated Europe. To maintain Europe’s global leadership it will be necessary to attract global talent, create world class innovation systems, address public sector debt, and reform social welfare systems to make public finances sustainable.
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