Performances: Growth, Productivity, Competitiveness

Abstract

Reading what prominent economists such as Alesina, Eichengreen, Porter and Phelps write on continental Western ‘Europe’ one gets the impression of a huge economic performance gap between this part of the globe and the United States: the latter doing particularly well, the former disastrously bad — with respect to France and Germany Porter (in Snowdon and Stone-house 2006: 13) even talks of ‘a mess’. Apart from a few positive words (with reservations) about Scandinavia (ibid.; Alesina and Giavazzi 2006: 9) they state in general terms that ‘Europe’ was good as long as it could catch up by imitation of American inventions, but that it has run into serious trouble since it has itself to be inventive (Alesina and Giavazzi 2006: 8; Eichengreen 2006: 2 and 5). In Phelps’ (2003, quoted from Gordon 2004: 13f) view continental Europe performs poor because venture capital and equity finance are underdeveloped and because corporatist institutions, e.g. ‘the need to consult with workers’, hamper innovation and competition. It also has developed a culture of ‘dependency’ with the result that many juveniles lack the ‘sense of independence and are unwilling to strike out on their own’. These are remarkable claims for studies that have as their empirical basis an imaginary ‘continental Europe’ (as in the case of Phelps) or are largely restricted to Italy (as is the case with Alesina and Giavazzi) or France, Germany and Italy (as in the case of Eichengreen) respectively. Nonetheless, Alesina and Giavazzi (2006: 11) go so far as to say that Europe is a ‘frog in slowly warming water’. A lot is wrong in European political economies and much has to be reformed, but ignoring the sometimes huge differences between individual countries is a scientific sin. Being uncritical of the United States, which the quoted studies are to an amazing degree, is another one.