Brussels, 01 Sep 2004
'Europe needs an urgent and complete reform of its economic model if it wants to continue with the integration process' was the message sent by two of the authors of the famous Sapir report, 'An agenda for a growing Europe - making the EU economic system deliver', at the ESOF 2004 conference.
In the report, commissioned by outgoing President of the European Commission Romano Prodi and published last year, Professors André Sapir and Philippe Agion also called for more investment in research and third level education, as well as the creation of a European Agency for Science and Research.
'The number one priority for the EU must be growth,' said André Sapir at the conference, reminding his audience that the EU gap vis-à-vis the US in terms of growth is widening.
'The convergence between Europe and the US stopped 30 years ago,' said Professor Sapir. Today, the EU growth rate is at two per cent compared to 3.4 per cent in the US. This low and declining growth rate is a symptom of our failure to adapt to globalisation and technological changes.'
Professor Sapir explained that the EU's unsuccessful attempts to transform itself into an innovation based economy were due to its failure to promote a number of essential elements: the entry of new actors into the economic scene; labour mobility within and across firms; the retraining of labour; the external financing of investment and the investment in research and development (R&D) and higher education.
Professor Sapir warned that the process of European integration is at risk if European governments do not comprehend that growth is a sine qua non condition for the sustainability of the European social model and for the success of present and future enlargements.
The Lisbon agenda, he added, was a good attempt at trying to rectify Europe's shortcomings. However, although the goals are ambitious enough, what is lacking is sufficiently ambitious means.
'There were too many targets with weak methods and instruments,' said Professor Sapir. 'Europe must focus on a single target - growth.'
Professor Sapir insisted that the EU should work on the two main differences it has with the US: the differences in efficiency of product and factor markets, especially the labour and capital markets, and the difference in investment in R&D and higher education systems.
'We need to complete the single market, particularly in financial services and we need to make it a dynamic single market.
'We need to spend more on our future and we need to spend it better,' he added.
Professor Sapir also called for a drastic reorganisation of the EU budget by decreasing the budget presently devoted to agriculture and increasing the budget for economic growth by 600 per cent.
'With the added money the EU would get from the agricultural budget, three funds could be created: the growth fund for the EU in general, the convergence fund for the low income countries and the restructuring fund for the affected countries.
'The current EU budget is a relic of the past. It is simply not forward looking enough. If Lisbon is the priority then you need to be rational and put in the budget and the instruments necessary to make it happen.
'Lisbon is a forward-looking process. We must be forward looking too,' said the professor.
Philippe Agion, professor at he University of Harvard emphasised the need for Europe to focus spending on third level education as opposed to primary and secondary, as has been the case until now.
'The more you invest in third level education, the more you will move towards innovation and growth,' he said, pointing out that the percentage of US citizens that complete higher education is 1.5 times higher than the current EU average.
'We have been imitators [of the US], now we must become innovators,' said Professor Agion.
Professor Agion also reiterated the call for a European Agency for Science and Research, based on the model of the National Science Foundation (NSF) in the US and based on four basic principles.
'To be successful this agency should be a bottom-up system with a unique selection criteria: excellence to avoid the corruption of the system. Furthermore it should also be based on peer evaluation and the selection of evaluators, which must be based on ranking and scientific standing, should be transparent and public,' said Professor Agion.
Finally, concluded the professor, Europe should follow the NSF example and invest equally in both applied and basic research. To read the Sapir report, please click here