In sharp contrast with the post-war period, income per head in the EU has begun to decline in comparison to that of the US over the past 10 years. Against this background, the revival of growth and productivity has become an overriding priority for European policymakers. Fostering innovation is key to this objective, but the author asserts that R&D investments alone will not do the job.
To get back on a high-growth path, Europe needs a comprehensive and coherent strategy which also involves:
- More competition and entry on the product markets;
- more investment in higher education;
- more developed financial sectors and markets and more flexible labour markets;
- a more proactive macroeconomic policy over the business cycle, and finally;
- there should be a clearer recognition that structural reforms may entail winners and losers; hence the importance of complementary policies aimed at correcting the inequalities caused by these reforms.
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