Europe: a portrait - Amazon Web Services

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Europe: a portrait
GDP of EU members, 2013
Great variation in size of European economies
Relative size of major world
economies, 2013
14
EU– 28 is world’s biggest trading bloc –
dwarves the size of major emerging
markets
12
10
€ trillion
8
6
4
2
0
EU 28
Source: Eurostat
US
Eurozone
China
Japan
India
Broad European characteristics
• Most of Europe within EU (exceptions)
• Member state populations vary from 0.4 million
(Malta) to 87 million (Germany)
• GDP per head 45 (Bulgaria) to 257
(Luxembourg) (EU28 – 100)
• Social provision – 14% GDP in Latvia to 34.6 %
in Denmark
• A combination of common culture and history
with key differences
Common characteristics of
European economies
• Mixed economies – details vary
• Similar trends in economic structure
o Decline of primary and secondary sectors (i.e.
agriculture and industry) – began earlier in Western
Europe
o Shift to service economy away from agriculture and
manufacturing


1960s: services c. 45% GDP in most countries
Early 2010s:70–80% the norm
Convergence in economic
ideology
• Western Europe – Keynesianism displaced by
neo-liberalism to varying degrees
• Spain, Portugal, Greece – political
dictatorship/economic isolationism –
converged to Western Europe
• Central and Eastern Europe – 45 years as
Soviet satellite and command economy – 15
years transition – convergence with Western
Europe
Subject to similar domestic and
international challenges
•
•
•
•
Environment
Employment
Demography
Increased competition
from Asia
• Technology changes
• International
economic cycles
• Increased capital
mobility
• Economic
interdependence
• Economic and
political integration
Europe – unity and diversity
• Diversity within broad general parameters
• Diversity from interaction of:
o economics
o politics
o history
o social preferences and culture
• Diversity leads to difference in emphasis
for policy and business
National differences
• Different organisational structures
o legal and finance structure
o ownership
o family firms, Mittlestand
• Each country has own strengths
o Germany: machinery/equipment, motor, chemicals
o UK: food and beverages, publishing/printing,
chemicals
o France: food and beverages, chemicals, metal prods
o Sweden: Motor, machinery/equip, pulp/paper
European social models
Sapir’s socio-economic models
• Nordic model (Dk, Fin, Swe, Netherlands)
o Highest level of social protection and welfare
o Active labour market policy
o Strong unions and compressed wage
structures
o Consensus
• 2. Anglo-Saxon (UK and Ireland)
o Social assistance of ‘last resort’
o Weak unions, wide and increasing wage
dispersion
o High incidence of low paid work
o Most market-oriented and little employment
protection
o Still differences to US where little insurance
against labour market risk
• 3. Continental model (Austria, Belgium,
France, Germany and Luxembourg)
o The old social market model


Market to be regulated for socially acceptable outcome –
for efficiency (now questioned) and equity
Those with stake in the system will be committed to it
o Heavy reliance on insurance-based, nonemployment benefits and pensions
o Declining but still strong unions
• 4. Mediterranean (Spain, Portugal, Greece
and Italy)
o Much of social spending to pensions
o Social welfare systems dominated by early
retirement
o Collective bargaining – strong compression
o Strict employment protection
Where do new member states fit
in?
• Differences but all have reconfigured their
economic, political and social systems in last 15
years
• In general – accepted economic liberalism
o Baltic States “joining the EU would mean adopting
rather more socially-oriented policies … Indeed a
significant part of the Euroscepticism has been based
on the notion that the EU is ‘far too socialistic’”
Paas, 2003: www.ezoneplus.org/archiv/
o Bigger new members, not so aggressively liberal
Above leads to Sapir’s model
matrix
Implications
• Ideal = high equity/high efficiency
• Framework does identify economies most
in need of reform
• Different models help explain why
agreement can sometimes be difficult at
European level
Europe: the future?
• 2007–8 financial crisis caused serious problems
for Europe – still recovering in some areas
• Europe 2020 – a long term programme intended
to restore competitiveness and deal with
structural problems
• Emphasises
o Smart growth – i.e. education and R&D
o Sustainability – efficient and green economy
o Inclusive growth
Europe 2020: a response to a
perceived competitiveness problem
• Employment
o 75% of 20–64 year olds to be in employment
• R&D
o 3% of GDOP to be invested in R&D
• Climate change and energy
o GHG emissions to be 20% below 1990 levels
o 30% energy from renewables
o 20% increase in energy efficiency
• Education
o Early school leavers below 10%
o 40% of 30–34 year olds with tertiary education
• Fighting poverty and social exclusion
o 20 million fewer to be at risk of poverty and social exclusion