EU Issues Competitiveness Report

The EU's Competitiveness Council hs just issused its annual competitiveness assessment. This year's report looks at issues such as:

- growth, productivity and employment,

- enterprise reorganisation and productivity growth,

- regional aspects of competitiveness, and

- enlargement and the competitiveness of manufacturing.

The key element of the report is the crucial role of productivity to improve standards of living.

This is not a simple black and white picture throughout the EU and amongst the EU's manufacturing and services sectors. The report finds that productivity performance varies widely amongst EU Member States, regions and accession countries, but is nonetheless heavily influenced by innovation and take-up of ICT.

The report finds that firms that achieve high productivity growth are those that combine organisational improvements with investment in new technologies, and particularly in information and communication technologies (ICT). ICTs have contributed to productivity growth more in the US than an in the EU, which relies more heavily on traditional types of capital.

Productivity growth disparities among EU regions are narrowing, but slowly. Regions that show high productivity growth tend to have good transport and telecommunications links, a strong entrepreneurial culture with good industry-science relations and clusters that encourage networking and a common vision among regional stakeholders.

Policies that support innovation, that improve competitive conditions, that encourage high-tech entrepreneurship at the regional level, and that favours clustering of innovative firms are essential ingredients for raising productivity growth.

A recent study for the Commission has provided more detailed information on which sectors have contributed positively and negatively to the productivity gap of the EU against the US in recent years. Sectors contributing to increase the gap are some key high-tech manufacturing sectors as well as the distributive trades and financial sectors. On the contrary, the communications sector has helped narrowing the productivity gap.

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