The Lisbon Review: beyond the rhetoric

At the end of the Lisbon Summit of March 2000, the European Heads of State did not only declare their ambition to make the European Union the most competitive and dynamic knowledge-based economy in the world by 2010 but they also committed themselves to the fact that the Union should have sustainable economic growth, with more and better jobs and greater cohesion.

This broad objective not only includes an increase in the employment rate from an average of 61 per cent in the EU today to 70 per cent by 2010, or 20 million additional jobs, but it based itself on the achievement of an EU average annual real growth rate of three per cent - which is considerably higher than the average of 2.1 per cent achieved over the past ten years.

To achieve this aim the EU committed itself to benchmarking based on quantitative and qualitative indicators, the setting of specific time-tables, and the translation of European guidelines into national and regional policies - all being key mechanisms for implementing this strategy.

In assessing this Lisbon Review the World Economic Forum adopted a benchmarking approach, comparing the EU with the US and an average of non-European OECD countries.

The findings should worry all those that have been gullible enough to swallow the EU's rhetoric and platitudes so far:

¤ The average EU economy receives worse ratings than the US and the group of other OECD economies in all dimensions of the Lisbon strategy except for social inclusion.

¤ While weak performance is country-specific - mainly Portugal, Spain, Italy and Greece, high performance tends to be issue-specific.

¤ There is no 'European model' of economic policy shared by all EU members.

¤ The most consistent difference compared to the US is a weakness in the business environment in EU countries.

¤ Leadership among the accession candidates is country-specific - the leaders being Estonia, the Czech Republic, Slovenia and Hungary.

When the study comes to gauge and assess the dimensions of competitiveness it makes it clear that competitiveness depends on the quality of a country's economic and political institutions and the extent to which they are supportive of employment, productivity growth, innovation and the ability to adjust to changing circumstances.

As I already had occasion to mention in Parliament, Malta lags behind in most areas, particularly when it comes to strengthening entrepreneurship through reduced regulatory burdens for business and improved conditions for SME business start-ups.

When comparing the US and the European business environment, the WEF finds that within the dimension of enterprise environment, the difference regarding business start-ups between the EU and the US is particularly severe, in favour of the US. Another large difference is in the dimension of the information society.

That the EU's Lisbon score for completing the Single Market is lower than the US score is worrisome given that the Single Market originally was to be completed by 1992.

Like the US, the other OECD economies clearly outperform the EU in terms of the information society, network industries and the enterprise environment.

Although many felt that sustainable development and market orientation do not go hand in hand together, the study shows that the other OECD countries have managed to achieve better policies and results even in the social protection and sustainable development areas while at the same time performing better in the more market oriented dimensions.

Clearly, this suggests that there is no conflict between market-oriented policies and the supposed 'European model' of social and environmental protection.

The Lisbon score also found that the accession countries will suffer from severe competitive disadvantages due to deficient market and regulatory environments.

The World Economic Forum's empirical results suggest that the EU economy indeed lags significantly behind the US and other OECD economies in the reform dimensions identified in the Lisbon Strategy.

One challenge for this strategy is however the lack of conformity of current economic policy approaches among the EU members.

This suggests that while the local authorities are trying to give the impression that an EU model exists, in actual fact different countries need to set different priorities for policy reforms to overcome their most important weaknesses.

The Lisbon Review 2002-2003 is published by the World Economic Forum and is a result of a collaboration between the World Economic Forum and the Centre for European Integration Studies (ZEI) at the Rheinische Friederich-Wilhelm University in Bonn, Germany; e-mail: leo.brincat@magnet.mt.