This Week in Europe, 31 March 2000
Executive Director of the Caribbean Council for Europe
Europe’s leaders intend to make the European Union (EU) the world’s most dynamic economy by 2010. They envisage achieving their objective through a revolution in economic policy. This they suggest will place new emphasis on making European industries more competitive; the rapid development of EU-wide electronic commerce, the fostering of knowledge-based industries and a wide range of social reforms.
Meeting in Lisbon and Portugal on March 23 and 24, European Heads of Government also made specific commitments and established deadlines for modernising their education and welfare systems and combating poverty. Their principle objective, they said, was to enable Europe to compete on equal or better terms than the US in global markets.
In their least contentious, least or divisive summit in recent years, EU leaders were able to agree to new policies that will, they suggest, increase average employment from the present level of 61 per cent to close to 70 per cent by 2010. Unusually, in a move intended to ensure delivery and overcome scepticism among European voters about empty promises, the leaders agreed to assume responsibility for achieving the summit’s obligations. To help achieve this and to monitor performance they are to hold each spring a summit to address both social and economic issues and monitor their commitments.
The complete package of measures agreed is wide-ranging.
On the electronic commerce side they include creating a fully liberalised telecommunications market by 2002; creating a legal framework for electronic commerce; reducing internet costs; ensuring all schools have internet access by 2001; and the creation of an electronic European action plan to create low-cost high-speed interconnected electronic and telecommunications networks across Europe.
European Heads also agreed that further reforms are to be undertaken in the single market in order to remove all barriers to services by 2001; to speed up the liberalisation of utilities; to simplify the regulatory environment; and to reduce state aid and promote competition.
With the objective of promoting innovation EU leaders also agreed to promote the creation of an inexpensive EU-wide patent by 2002; and high speed electronic links between research centres and universities by 2002. To promote the creation of small companies, a study will be commissioned on small company formation aimed at finding ways to reduce the time and cost of setting up new business; and the redirection of the European Investment Bank to funding business start ups, high tech companies and micro business.
The summit also addressed the questions of improving the efficiency of financial markets, the ways to make available more risk capital available to new companies, and recognised the need for EU Government to improve their macro-economic co-ordination. In this latter case, they proposed that states reorient public finances so as to ensure sustainable growth and employment through changes to tax systems and the long-term sustainability of public finances. Special mention was made of the need for Europe to consider the impact of ageing populations and the sustainability of pensions systems up to 2020.
The need to expand welfare and education was also a focal point in Lisbon. Leaders agreed to build an active welfare state that ensured that new technology did not increase unemployment, poverty or create social exclusion. To achieve this they proposed to increase the number of 18-24 year olds in further education and training; expand the role of schools by creating new partnerships with enterprise and to develop proposals for lifelong learning in areas such as information technology, languages, and entrepreneurship.
The summit marked a sea change in the EU’s economic thinking. That all leaders were able to agree and establish deadlines for achieving almost all of their objectives suggests that they have recognised the need to modernise their economies in order to compete in the global economic revolution now underway.
It is clear that the European view of the role of the state and what is necessary to achieve sustained growth has changed. All EU member states are now able to agree a single position. Welfare provision apart, this means there is also a convergent EU/US view. Both agree over the nature and the implications of the global economic revolution taking place and what must be done to survive.
More specifically these changes in Europe’s approach raise some real questions about the ways in which Europe relates to regions such as the Caribbean and their economic and trade development needs. This column has commented previously that much of the recent negotiations for a successor to Lomé IV the concentration was on saving the past and ensuring a transition to future with little mention of the newer industries on which the region will increasingly rely. As a recent paper produced by the Regional Negotiating Machinery shows, already 61 per cent of the region’s GDP comes from the service sector.
On this basis you might quite reasonably ask why it is that the solutions Europe is seeking to its own needs are not on offer to more advanced developing regions such as the Caribbean? The more cynically minded might answer that is because Europe and the US do not want to see regions like the Caribbean become an early competitor in areas in which the EU hopes to succeed. But the answer is probably more prosaic.
Development agencies and many of the governments they serve are in something of a time warp. Their priorities owe more to the past than the future. Thus some donor nations are delivering development models very different to those promoted by their own governments in their home economies.
Europe’s decision to accelerate its participation in the new global economy is indicative of where it believes future growth lies. Development policy is still struggling to break out of the philosophy of the cold war. If there is not to be one law for the rich and another for the poor, the gap between domestic and development policies must be closed.