At a time when the outlook for growth in Europe is becoming bleaker and all
eyes are turned towards economic forecasters, those who think to ask businesses
what they need in order to develop are few and far between. Nonetheless, we
would do well to listen to a baker explain the conditions necessary for the
growth of his bakery: first and foremost, he needs customers willing and able to
buy his bread, then ingredients (flour, salt, water, etc.) and employees, and
finally sufficient freedom to run his business – for example, food standards
that allow him to innovate. The needs of a multinational company would scarcely be
different: solid demand (consumption, investments, exports, etc.), high-level
production factors (human resources, raw materials, infrastructure, etc.) and “growth
catalysts” (suitable regulations, public services for quality businesses,
etc.).
eyes are turned towards economic forecasters, those who think to ask businesses
what they need in order to develop are few and far between. Nonetheless, we
would do well to listen to a baker explain the conditions necessary for the
growth of his bakery: first and foremost, he needs customers willing and able to
buy his bread, then ingredients (flour, salt, water, etc.) and employees, and
finally sufficient freedom to run his business – for example, food standards
that allow him to innovate. The needs of a multinational company would scarcely be
different: solid demand (consumption, investments, exports, etc.), high-level
production factors (human resources, raw materials, infrastructure, etc.) and “growth
catalysts” (suitable regulations, public services for quality businesses,
etc.).
To accelerate growth, reforms are needed on all of these issues. However, as
one plan after another was designed, these reforms seem to have been forgotten,
for both good and not-so-good reasons. The good reason is that for the moment
the debate has focused on two subjects, financing and currency, which are
absolutely critical in the short term.
one plan after another was designed, these reforms seem to have been forgotten,
for both good and not-so-good reasons. The good reason is that for the moment
the debate has focused on two subjects, financing and currency, which are
absolutely critical in the short term.
As for the bad reasons, the first is a
question of choice. Where to begin? What aspect of demand, which factors of production
and regulations? For choices of this sort, businesses have well-oiled strategic
processes, while states have seen their planning capacity diminish. This has
led them to adopt a sequential form of problem management according to urgency,
as states are more likely to come to an agreement in such cases. However, this
sequential management has its limits: key reforms such as education,
the European labor market, innovation, energy transition, etc. take time. They
must be undertaken well in advance – in fact, they should already be in place!
question of choice. Where to begin? What aspect of demand, which factors of production
and regulations? For choices of this sort, businesses have well-oiled strategic
processes, while states have seen their planning capacity diminish. This has
led them to adopt a sequential form of problem management according to urgency,
as states are more likely to come to an agreement in such cases. However, this
sequential management has its limits: key reforms such as education,
the European labor market, innovation, energy transition, etc. take time. They
must be undertaken well in advance – in fact, they should already be in place!
The second bad reason
for the absence of reforms in the debate is that the financial crisis offers up
scapegoats for lackluster European growth. These scapegoats – not all innocent
– save us from having to analyze the deep-seated causes behind the problem.
Nevertheless, certain causes have to do with the very foundations of the
European model for growth: the sectors where competition and the single market
exist have been strengthened. This has not been the case, however, for public
services, which generally enjoy a monopoly. And yet, this half of the European
economy accounts for 50% of GDP and regulates the other half. Naturally, it is
not a question of having day-care centers throughout Europe compete against one
another; evaluation and comparison of services across the EU should have played
this role. However, initiatives of this sort, such as Pisa for education or
Shanghai for research, have mostly come from outside the EU; the European
growth plan has left out half of GDP!
for the absence of reforms in the debate is that the financial crisis offers up
scapegoats for lackluster European growth. These scapegoats – not all innocent
– save us from having to analyze the deep-seated causes behind the problem.
Nevertheless, certain causes have to do with the very foundations of the
European model for growth: the sectors where competition and the single market
exist have been strengthened. This has not been the case, however, for public
services, which generally enjoy a monopoly. And yet, this half of the European
economy accounts for 50% of GDP and regulates the other half. Naturally, it is
not a question of having day-care centers throughout Europe compete against one
another; evaluation and comparison of services across the EU should have played
this role. However, initiatives of this sort, such as Pisa for education or
Shanghai for research, have mostly come from outside the EU; the European
growth plan has left out half of GDP!
As future plans are worked out, states
must fulfill their role as “growth catalysts” and accept to evaluate and pilot
their services according to the added value they provide for users, citizens
and businesses.
must fulfill their role as “growth catalysts” and accept to evaluate and pilot
their services according to the added value they provide for users, citizens
and businesses.
Published in Les Echos