THE LISBON STRATEGY PAST, PRESENT AND FUTURE

1. THE LISBON STRATEGY PAST, PRESENT AND FUTURE Franco Mosconi Jean Monnet Professor �The Economics of European Industry� University of Parma

2. Summary Prologue The Lisbon Strategy 2000 The problems of the Lisbon Strategy Why has the Lisbon Strategy failed to fulfil our hopes so far? The Lisbon Strategy four years to the deadline (2006) The insight of Professor Alexis Jacquemin The European Industrial Policy �Triangle� References

3. I. Prologue For much of the 1990s, the intellectual and practical energy of EU was directed towards three goals:

4. However, in spite of fulfilling these institutional aspirations, at the same time the EU has exhibited unsatisfactory growth rates, as the �Sapir Report� [2003a] made clear.

6. II. The Lisbon Strategy 2000 Thus, launched in 2000, the Lisbon Strategy was intended to solve the European �growth problem� through: Improving EU�s competitiveness For example, by increasing R&D spending up to 3% of GDP by 2010. Reforming the European social models. For example, by increasing the employment rate up to 70% by 2010.

7. III. The problems of the Lisbon Strategy But, the Lisbon Strategy has delivered much less than had been hoped for or that is necessary for renewing the European economy.

8. Of course, as the �Lisbon Scorecard� [2006] of the London-based think-tank, CER, points out, there are great differences in implementation among Member States:

9. Complexity and faulty implementation, i.e. methodological problems? OR Fundamental substantive problems? IV. Why has the Lisbon Strategy failed to fulfil our hopes so far?

10. Food for thought: �The problem [with the Lisbon Strategy] has to do with the lack of incentives to behave in accordance with [its] prescriptions� that is, the lack of incentives to coordinate reforms within the EU.� Jean Pisani-Ferry, Director of Bruegel [2005].

11. V. The Lisbon Strategy four years to the deadline (2006) What can Europe do to improve its economic performance? Complete the Single Market Increase investment in R&D and innovation

12. 1. Complete the Single Market

13. 2. Increase investment in R&D and innovation

14. VI. The insight of Professor Alexis Jacquemin In the 1980s, Professor Jacquemin published a well-known book entitled: �The New Industrial Organization � Market Forces and Strategic Behavior�, MIT Press[1987]. Part of the book was an extensive chapter on the �Industrial Policy and Models of Society�.

15. One of the most noteworthy arguments in this book was his criticism of the domestic policies of Member States, which sought to create �national champions� e.g. in semiconductors� industry. His main objection was that �national champion� policies create �barriers that prevent genuine specialization at the European level�� � that allow US and Japanese companies to take the lead in such industrial fields.

16. As a result, Jacquemin recommended to formulate a �concerted European industrial policy that will help overcome industry strategies along national lines.� Examples of successful collaborations in the past include Airbus, but also STMicroelectronics. Today, the appropriate fields for the creation of (new) �European champions� lie in the sectors of biotechnology, ICT, renewable energy, defence industry, space industry i.e. in sectors where R&D effort is more intense.

17. Jacquemin�s insight on the need for EU-level industrial policy is particularly valuable today, in light of:

18. Luckily, the Single Market has a strong guardian � European companies themselves. The cross-border M&As that have spurred governments to �protect� their �strategic industries� or �national champions�are a result of companies� restructuring strategies in light of changes in the Single Market. �� Europe�s nationalists cannot reverse or perhaps even much affect the market-opening actions of their companies. But they may increase its costs.� The Economist, 2 March 2006

19. VII. The European Industrial Policy �Triangle�

20. The Industrial Policy �Triangle� Investment in knowledge and innovation is crucial in the modern knowledge-based economy. Thus, it is paramount that the EU reinforces its Technology Policy, to match the strength and the reach of its Competition and Commercial Policies.

21. The combination of a true Single Market (and the industry consolidation measures it brings about) with an EU industrial policy, concentrated in promoting research, innovation and knowledge-creation, sets the foundation for the creation of truly �European Champions� � the future pillars of the EU economy in the modern globalised world. I have tried to elaborate these ideas in greater detail in my latest paper, �The Age of �European Champions� � A New Chance for EU Industrial Policy�, published in The European Union Review [2006].

22. VII. References CER-Centre for European Reform [2006], The Lisbon Scorecard VI - Will Europe's Economy Rise Again?, by A. Wanlin, London.� Cohen E., Lorenzi J-H. (Eds.) [2000], Politiques industrielles pour l�Europe, Conseil d�Analyse �conomique, Rapport 26, Paris, La documentation Fran�aise. European Commission [2003], EU productivity and competitiveness: An industry perspective � Can Europe resume the catching-up process?, Edited by O�Mahony M. and van Ark B., Brussels. Jacquemin A. [1987], The New Industrial Organization: Market Forces and Strategic Behaviour, Cambridge, Mass., MIT Press. Mosconi F. [2006], �The Age of �European Champions� � A New Chance for EU Industrial Policy�, forthcoming in The European Union Review, N. 1/2006.

23. Pisani-Ferry J. [2005], Speeding up European Reform: A Master Plan for the Lisbon Process, �Munich Economic Summit� (June), CESifo Forum, 2/2005: What�s Wrong With Lisbon? Sapir A. (ed.) [2003a], An Agenda for a Growing Europe � Making the EU Economic System Deliver, �Report of an Independent High-Level Study Group established on the initiative of the President of the European Commission�, Brussels. Sapir A. [2003b], Enlargement and the Competitiveness of European Industry, Paper presented at the 27th Italian National Conference on Industrial Policy and Economics, organised by �L�industria� and the Faculty of Economics, University of Parma, 26-27 September. Sapir A. [2005], Globalisation and the Reform of European Social Models, Background document for the presentation at ECOFIN Informal Meeting in Manchester, 9 September.

24. Thank you for your attention! Homepage: www.cattedramonnet-mosconi.org E-mail: franco.mosconi@unipr.it