Industrial change and globalisation: Challenges for the European Social Model.
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Transcript of Industrial change and globalisation: Challenges for the European Social Model.
Economic growth scoreboardAfghanistan 29.0%Turkmenistan 23.1%Equatorial Guinea 20.0%Chad 15.0%Isle of Man 13.5%Azerbaijan 11.2%Liechtenstein 11.0%Faeroe Islands 10.0%Armenia 9.9%Ukraine 9.4%Kazakhstan 9.2%China 9.1%Lithuania 9.0%Argentina 8.7%
Qatar 8.5%India 8.3%Bhutan 7.7%San Marino 7.5%Algeria 7.4%Latvia 7.4%Russia 7.3%Botswana 7.2%Vietnam 7.2%Cook Islands 7.1%Nigeria 7.1%Albania 7.0%Tajikistan 7.0%Mozambique 7.0%
CIA: World Fact Book 2003-04
Balance of payments scoreboard (Billion USD)
Japan 135,9Germany 57,2Switzerland 36,0Russia 35,9China 31,2Norway 29,3Taiwan 28,6Singapore 26,2Saudi Arabia 22,2Sweden 19,6Canada 18,6
Hong Kong 17,4France 13,8Malaysia 13,4United Arab Emirates 12,5South Korea 12,3Netherlands 12,1Belgium 10,7Finland 10,3Venezuela 9,7…….United Kingdom -7,6USA -541,8
0
10
20
30
40
50
60
70
1999 2000 2001 2002 2003 2004
Europe Canada Japan Hong Kong China India
US FDI - % of total – (2004: 1st + 2nd Q)
%
US Direct investment abroad. US Dep. of Commerce.
%
0
10
20
30
40
50
60
1998 1999 2000 2001 2002 2003
EU US Japan Hong Kong China India
UK Foreign Direct Investment - % of total %
Direct investment abroad. UK National Statistics
Financially viable
The ’real’ economy
Economic growth
Employment
The financial economy
Balance of payments
Government budget
-1
0
1
2
3
4
5
90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5
USA EU
0
2
4
6
8
10
12
90 91 92 93 94 95 96 97 98 99 0 1 2 3 4
USA EU
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
90 91 92 93 94 95 96 97 98 99 0 1 2 3 4
USA EU
-7
-6
-5
-4
-3
-2
-1
0
1
2
90 91 92 93 94 95 96 97 98 99 0 1 2 3 4
USA EU
GDP Growth Unemployment
Government budget Balance of Payments
EU - US
US current account 1889 – 2004 - % of GDP
-8
-6
-4
-2
0
2
4
6
8
89 94 99 4 9 14 19 24 29 34 39 44 49 54 59 64 69 74 79 84 89 94 99 4
Source: OECD Economic Outlook no. 76
World Economic Forum scoreboard 2004GLOBAL:1. Finland2. USA3. Sweden4. Taiwan5. Denmark6. Norway7. Singapore8. Switzerland9. Japan10. Iceland11. UK12. Netherlands13. Germany14. Australia15. Canada
EU:1. Finland2. Sweden3. Denmark4. UK5. Netherlands6. Germany7. Austria8. Estonia9. Spain10. Portugal11. Belgium12. Luxembourg13. France14. Ireland15. Malta
16. Slovenia17. Lithuania18. Greece19. Cyprus20. Hungary21. Czech Republic22. Slovakia23. Latvia24. Italy25. Poland
Based on broad concept. Results very similar to Lisbon benchmarking
Economic policies
Monetary Policy
Fiscal Policy
Structural Policies
The introduction of the Euro put focus on Structural Policies
Lisbon was an answer
Did politicians listen?
The Lisbon process – the target
Adopted by Heads of State and Government in Lisbon Spring 2000:
To make Europe the most competitive, knowledge-based economy in the world by 2010, based on social cohesion and environmental sustainability
Progress to be measured by the Open Method of Coordination: Benchmarking and adoption of best practices
Sustainability issues added one year later in Gothenburg
The Lisbon process
Primarily inspired by the growth, jobs and productivity gap to US
A ten-year plan to restore European Competitiveness
‘Soft’ rather than ‘hard’ law (different from Internal Market)
Open method of Coordination
There is a European Economic and Social Model
and it is characterised by large public sector, focus on welfare state and emphasis on the environment.
Taxes as % of GDP:
China: 16%
India: 17%
Japan: 26%
USA: 25%EU-15: 40%
European Economic and Social sub models
Anglo-Saxon Northern
Continental
Similarities: Hands-off approach to marketsDifferences: Size of welfare state
Similarities: Large welfare sectorDifferences: Approach to market
OECD: Countries with relatively liberal attitude to product market regulation:UK, Ireland, Denmark, Slovakia, Sweden, Finland, Netherlands.
Countries with relatively restrictive attitudes:Germany, Spain, France, Czech Rep., Italy, Hungary
OECD: Product Market Regulation 1998-2003. February 2005
European Economic and Social sub models
Anglo-Saxon
Northern
Continental
Similarities: Hands-off approach to marketsDifferences: Size of welfare state
Similarities: Large welfare sectorDifferences: Approach to market
Nordic model combines a liberal approach to markets with high quality welfare sector and provides ‘flexicurity’
Government budgets in Nordic and Anglo-Saxon models
-6
-4
-2
0
2
4
6
8
99 0 1 2 3 4
Den
Swe
Fin
UK
US
Current accounts in Nordic and Anglo-Saxon models
-8
-6
-4
-2
0
2
4
6
8
10
99 0 1 2 3 4
Den
Swe
Fin
UK
US
Re-introduction of Structural Policies
Global competition requires flexibility and a higher knowledge base
European population requires confidence and security
Target: Combining flexibility and security = Flexicurity
Public sector and competitiveness
30% 40% 50%
UK
Den
Swe
Spa
Fra
Ger
Ita
Fin
Bel
Tax of GDP
WEF score
4
5
6
Public sector and competitiveness
Public sector reforms are essential for competitiveness agenda:
•Value for money•Combat corruption•Modernisation (eGovernment)•Good infrastructures•From passive to active
Globalisation is working
€30 €85
Consumers get richer, but can we adapt and create new, sustainable jobs?
Outsourcing – and insourcing
In some countries the debate focusess only on outsourcing
In others a more balanced debate on outsourcing and insourcing
Globalisation is not just about loosing, also winning
The negative debate shows fear for lack of competitvness and thus lack of strucutral reform
Attitudes towards globalisation in Europe
0 1 2 3 4 5 6 7 8
Den
Net
Ire
Swe
Fin
UK
Ger
Bel
CR
Spa
Ita
Pol
Fra
Source: IMD survey 2004. Index 0-10.
Need for reform
Reforms are at least needed in :labour market and social welfareInnovation, entrepreneurship and market
Labour market and social welfare
Life cycles are shorter and shorter
Need for constant knowledge upgrade
Calls for flexible labour market with security and Active Labour Market Policy
Ageing population requires life-long learning and longer working life
Innovation entrepreneurship and the markets
Europe must be better to grow SME’s
Innovation must be brought to the markets – closer links between research and real life
Europe’s risk culture underdeveloped
EU budget
EU budget can in general contribute in a limited way to development of European competitiveness. Budget is only 1% of GDP – and ½ is for CAP
Coordination of national policies would be stronger
Focus and link to overall targets could help, but
the debate is now on marginal issues on overall size and fight for national corners
0
50
100
150
200
250
Lux Ire Den Aus Net UK Bel Swe Fin Fra Ger Ita Spa Gre Por
GDP per Capita – 2005 Index. EU-15 = 100. PPS
US: 158,8 Japan: 118,9
GDP per Capita – 2005 Index. EU-15 = 100. PPS
0
50
100
150
200
250
Lu
x
Ire
Den
Au
s
Net
UK
Bel
Sw
e
Fin
Fra
Ger
Ita
Sp
a
Gre
Slo
ve
Por
CR
Hu
n
Slo
va
Est
Lit
Pol
La
t
GDP growth rate – 2005 Percentage change over previous year
0
1
2
3
4
5
6
7
La
t
Lit
Est
Po
l
Ire
Slo
va
CR
Hu
n
Slo
ve
Lu
x
Gre
Sw
e
Fin
UK
Sp
a
Bel
Den
Au
s
Fra
Po
r
Ita
Net
Ger
US: 3,0 Japan: 2,1
Total unemployment rate -2004 (%)
0
2
4
6
8
10
12
14
16
18
20
Lu
x
Au
s
Ire
UK
Net
Cy
p
Den
Hu
n
Slo
n
Sw
e
Po
r
Ma
l
Bel
CR
Ita
Fin
Est
Ger
Fra
Gre
La
t
Sp
a
Lit
Slo
v
Po
l
%
USA: 5,5
Labour productivity per person employed 2005GDP in PPS per person employed relative to EU-25 = 100
0
20
40
60
80
100
120
140
%
Gross domestic expenditure on R&D % of GDP - 2003
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5%
US: 1.91 – Canada: 2.67 – Japan: 3.12
Spending on Human Resources Spending on education as % of GDP
0
1
2
3
4
5
6
7
8
9%
US: 5,35 – Japan: 3.60
Life-long learning % of population 25-64 participating in education and training
0
5
10
15
20
25
30
35
40%
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
Den Aus Swe Fin Ire UK Fra Ita Ger Spa Por Bel Gre Net Lux
E-government on-line availability 2003
%
0
50
100
150
200
250
300
350
Sw
e
Fin
Ger
Net
Den
Lu
x
Au
s
Bel
Fra
UK
Ire
Ita
Slo
vn
Sp
a
Hu
n
Ma
l
CR
Cy
p
Est
Gre
La
t
Slo
v
Po
r
Po
l
Lit
Patent applications to European Patent OfficePer 1 million inhabitants - 2002
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
5
Lu
x
UK
Sw
e
Net
Den
Fin
CR
Fra
Au
s
Ger
Bel
Hu
n
Po
l
Est
La
t
Slo
v
Slo
vn
Po
r
Ita
Ire
Lit
Sp
a
Gre
ICT Expenditure 2004As % of GDP
US: 5,5 – Japan: 3,5
Energy intensity of the economy Consumption of energy divided by GDP. Kg of oil equivalent per 1000 Euro. 2002
0
200
400
600
800
1000
1200
1400
Lit
Est
Slo
va
CR
La
t
Po
l
Hu
n
Slo
ve
Cyp
Fin
Gre
Po
r
Sp
a
Bel
Sw
e
UK
Net
Lu
x
Fra
Ita
Ger
Ire
Au
s
Den
Level of corruption
0
1
2
3
4
5
6
7
8
9
10
Fin
Den
Sw
e
Net
UK
Lu
x
Au
s
Ger
Bel
Ire
Fra
Sp
a
Por
Cyp
Slo
ve
Est
Ita
Hu
n
Lit
Gre
CR
Lat
Slo
va
Pol
Transparency International 2003 US: 7.5 – Canada: 8.5
Flexibility of business environment
0
5
10
15
20
25
Ire Fin Den Net Aus Spa Ger CR Fra Ita Pol
Composite index. Danish Industry