Regional competitiveness and growth: a Gordian knot for Europe

A week has passed since the European Business Summit (EBS) 2014 where the European Sting was official media partner. On 14 May, one of the first sessions that took place at the library of Edmond Palace had the title “How do European regions contribute to competitiveness?”. European Sting was there to report this vital issue for Europe. The European Union is facing one of the toughest times of its history with one of the main challenges to be regional growth. It is only through policies that promote such opportunities European regions will become more competitive in an era that gowth is needed the most. Failure of Lisbon Strategy It is indisputable that Europe has to enhance its competitive advantage by improving the everyday life of its citizens. Europe’s attempt to improve competitiveness was introduced with the Lisbon Strategy in 2000, which was supposed to give a boost in European economies dynamics by 2010. Unfortunately, this strategy didn’t manage to fulfil the goals that were set, even if it contributed to the creation of more than 18 million new jobs. As a result a new competitiveness strategy had to be launched in order to have a more antagonistic environment. Europe 2020 Strategy This strategy was launched by the European Commission (EC) in 2010 and contains a 10-year growth plan of European regions. Its main goals are focused on growth and job creation. The first pillar concentrates on the development of the economy through knowledge and innovation while the second one carries forward a greener and more competitive economy. Last, the third pillar focuses on the human capital and the high employment level. Importance of SMEs The European commissioner of Regional Policy Johannes Hahn mentioned during the aforementioned session at EBS that “competiveness in the EU regions is one of the greatest challenges”. He also stated that public investment has increased compared to before crisis figures and 70% of the funds are given to less developed regions whereas the rest 30% to developed – transition regions. Another important issue that is linked to competitiveness of the “Old Continent” and it was greatly discussed during the session was the importance of SMEs. One of the key issues was that the European regions must play their role in keeping companies in their own country or at least within the EU borders. Therefore, a good starting point for improving competitiveness will be a more efficient fund allocation provided to SMEs. In need for a more robust energy sector There must be set some priorities apart from just having budget and regulations. The EU has to find out the weaknesses that are leading to less regional growth. Energy is one of the sectors that the EU has to become more efficient, because there is not enough renewable energy. Consequently competitiveness i being driven to lower levels. This issue was also addressed by the commissioner. Elections influence competitiveness The European elections that is taking place in the next days, from 22 to 25 of May, will be of great significance for European regions’ competitiveness because the election of the new president of the European Commission is highly connected to that. Thus, whatever the result will be, it will surely have an impact on the promotion of Europe’s 2020 Strategy. Human capital: a great advantage Developed countries such as Switzerland, Germany, Finland, the Netherlands, Sweden and the United Kingdom are the most competitive economies according to the Global competitiveness Report 2013-2014 of the World Economic Forum. On the contrary, countries like Greece, Italy, Spain, Portugal need greater support in order to reach levels that will be more optimistic. The European countries will get more competitive if the EC focuses and invests more on human capital, which in turn will help each and every economy to recover from recession and climb up to high growth levels. Thus, skilled individuals are a great asset for every region separately and Europe as a whole. Despite EC’s policies are helping to boost competitiveness in the European Union and are promoting growth, it seems that there is a lot more to be done to reach levels that are comparable to the United States or Asian countries.