Svejnar, Jan --- "Structural reforms and competitiveness – will Europe overtake America?" [2003] ELECD 103; in Tumpel-Gugerell, Gertrude; Mooslechner, Peter (eds), "Structural Challenges for Europe" (Edward Elgar Publishing, 2003)

Book Title: Structural Challenges for Europe

Editor(s): Tumpel-Gugerell, Gertrude; Mooslechner, Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843764748

Section: Chapter 3

Section Title: Structural reforms and competitiveness – will Europe overtake America?

Author(s): Svejnar, Jan

Number of pages: 12

Extract:

3. Structural reforms and
competitiveness ­ will Europe
overtake America?
Jan Svejnar1

1. FROM CONVERGENCE TO DIVERGENCE

Between the late 1940s and early 1990s, Western Europe and Japan experi-
enced an extended period of gradual catching up with the United States in
productivity, technological sophistication and living standards. This trend
is well captured in a historical perspective in Figure 3.1, taken from Angus
Maddison (1997). In view of this long-term convergence, it was reasonable
to project that Western Europe and Japan would by and large catch up and
in some respects start overtaking the United States in the late 1990s or early
2000s.2
Yet, the long-term convergence between Western Europe and the
United States stopped in the early to mid-1990s.3 Indeed, as may be seen
from Figure 3.2, since the early 1990s the European Union's relative posi-
tion has weakened in terms of GDP growth, and since the mid-1990s also
in terms of GDP per capita (Figure 3.3) and labour productivity growth
(Figure 3.4).4 While this change is clearly detectable at the level of Europe
as a whole, a number of smaller states of the European Union have done
better, on average, than larger states in productivity and employment
growth.
The Central and Eastern European states that are entering the
European Union have a relatively well-educated population, but they will
temporarily reduce the average level of performance in the European
Union in terms of labour productivity and income ...