The European Union has no hope of achieving its goal of becoming the most competitive economy in the world by 2010, according to the London School of Economics (LSE).
In an attempt to close the productivity gap with the US, the EU, in 2000, launched its Lisbon Agenda, aimed at fostering innovation, research and entrepreneurship across Europe, but a study published by the LSE’s Centre for Economic Performance (CEP) notes that the US is still much more productive than the EU mainly due to:
- Unwillingness of EU member states to implement product and labour market reforms;
- failure to create a Community patent – which makes registering a patent in the EU five times more expensive than in the US (see our LinksDossier on the Community Patent);
- lack of investment in research: with a ratio of R&D to GDP that “has never gone past 2% let alone got anywhere close to the 3% target”, the EU lags behind Japan and the US and is being caught up by China (see our LinksDossier on Investing in research);
- brain drain: the EU will soon have a shortage of highly-qualified R&D staff because the US remains “the preferred destination for migrant scientists”, and;
- a badly targeted budget: the CEP suggests that the EU could make better progress by adapting its budget “to reflect the Lisbon vision”.
The study states that without wide-ranging reforms: “The reality is that Europe will not achieve the objectives for 2010, if at all.”