Cause and Effect in European Politics and Law

Who is where before Europe 2020?

Adelina Marini, March 20, 2010

Ever since the European Union launched the Lisbon Strategy for Growth and Jobs for the first time in 2000, aimed at making the European economy the most competitive in the world by 2010, the Centre for European Reform is making each year an analysis of the implementation of the strategy. This is year is not an exception, but it has bigger significance because it is the Lisbon Strategy that the new Europe 2020 programme will be based upon. The new strategy Europe 2020 is in fact a natural successor of the aims, set back in the year 2000.

The main pillars of the Lisbon strategy are innovation, liberalization, enterprise, employment and social inclusion, environment. As you can see, the differences with Europe's ambitions for 2020 are not many, as the new strategic document is relying on the following priorities: smart growth, sustainable growth, inclusion (social inclusion), innovation union, youth on the move, digital society, industrial policy for green growth, platform against poverty.

The Centre for European Reform (CER) has divided the 27 EU member states in three groups in its latest Lisbon Strategy Scoreboard: strong performers, must do better countries and laggards. Probably it will not be surprise that the best performing economies in the EU are the Nordic countries, Austria and the Netherlands. In the second group we can find Germany, Britain, France. And the laggards coincide with another term, introduced recently - the PIGS countries (Portugal, Italy, Greece, Spain).

The same lack of surprise goes with Bulgaria which is on the 25-th position out of 27, followed only by Romania and Malta. An interesting conclusion could be derived from the 10th Lisbon Strategy Scoreboard, and that is - that the grouping is no longer on the axis new members vs. old members. For example, the Czech Republic is on the 10th position even before the country with the highest standard of living Luxembourg and before Belgium.

Another important conclusion is that the success of the first 10 countries is due mostly to their high productivity rates, the introduction in daily life of information and communication technologies (ICT) and to competition. Furthermore, the authors of the scoreboard Simon Tilford and Philip Whyte say there is a clear correlation between the level of investments in ICT and economic growth, as well as productivity.

Similarly looks the situation with investments in research and development. Only Finland and Sweden have complied with an advisable rate of 3% of GDP investments in innovation. All the rest EU member states are below 2%, and Bulgaria is investing even less - below 1% of its GDP. A serious hurdle for research investments, however, is the fragmentation of the patent system, the scoreboard has found out. For example, in order for you to get a pan-European patent (for all member states), this will cost you 70,000 euro while in the US the price is 20,000 euro. Fortunately, there is hope that the issue will be resolved soon with the proposal for a common European patent.

Among other serious obstacles for the achievement of the Lisbon Strategy targets, are insufficient liberalization of former monopolies like in the gas and electricity sectors, telecommunications and transport. Regarding transport, the situation is extremely hard in Central and East European countries.

Enterprise is another motor of growth, achieved by few member states. Young companies, according to CER, are in the foundation of the most dynamic economies. They are a source of most of the jobs creation. This is easy to explain - young companies are rarely infected by inherited working practices (often ineffective) and by old business models.

This indicator is the most successful in the Lisbon Strategy which puts a special emphasis on small and medium enterprises. If 10 years ago Greece, the Czech Republic, France, Hungary and Italy had the biggest hurdles for the creation of firms, now they are doing very well. Currently France is the country where a business could be started most easily in the entire EU. In spite of the reforms for the last 10 years, however, currently in business environment the best performing EU member states are Ireland and Britain, and the laggards are Greece and Spain.

The CER economists do not agree with the claim that Europe 2020 is a natural successor of the Lisbon Strategy. They say that Europe 2020 is an entirely new vision, based upon the financial crisis. Taking into account the analysis of the Lisbon Strategy, though, Simon Tilford and Philip Whyte recommend updating of the Lisbon document, instead of making an entirely new one. What needs to be changed is less focus on measures like research and development spending. Instead, a more complex concept must be found to reflect more precisely this indicator.

Beside this, if Europe 2020's aim is to have more influence on member states' efforts to reform, then the EU should find a better method of governance and not a new strategic document. The authors also recommend deepening of the single market, removing of red tape, as well as facilitating free movement of workers within the EU. A new way of interpreting the role of science and innovation is also needed.

The 10th Lisbon Strategy Scoreboard as well as Europe 2020 are documents which must be very carefully read and examined in Bulgaria, where the attempts for reforms remain just attempts or achieve disputable results. Besides, here politicians rarely thinks that long to the end of their mandate, not to mention to look beyond in the 10 years. They are also inclined to solve mainly daily problems instead of laying the foundations these problems to be solved in the longer term.

Important lessons could be taught from the chapters euinside chose to present here from the Lisbon Strategy Scoreboard - productivity, monopolies in public services, ICT investments, small businesses, recently pressured by majority's wish to make them pay for the actions and inactions of previous, current and probably future governments.

Unfortunately, so far there is no indication that Europe 2020 has attracted an interest of a serious consideration by the government. We saw this when president Gheorghi Parvanov tried to clean his image with it, and this week the foreign minister Nikolay Mladenov disappointed the audience with his public lecture on Europe 2020, held in the Economics University in Sofia. He disappointed because he refrained from outlining even a single element, which could help Bulgaria at least attempt to invest more efforts or energy. Mr Mladenov also refrained from making a forecast, responding to a student's question whether Bulgaria would be a competitive economy to Britain and Germany in 10 years. That's a pity.