Chapter 3: Economic Growth in the European Union

Growth performance among the EU-15 countries has been mixed. While it has been sluggish in France, Germany and Italy, several other EU countries have done well. Some successful countries, such as Finland, Ireland, Sweden and the UK, have relied strongly on the introduction of new technologies, in particular information technology. Greece and Spain have also been successful but have relied on traditional capital accumulation and increased labour input. The Lisbon Strategy, which focuses on the role of knowledge-based industries, should adopt a more flexible approach. Countries on the technology frontier should continue to rely on knowledge-based sources for growth. Other countries would be better advised to rely mainly on accumulation of traditional capital and increases in labour input, while they approach the high-tech frontier via technology transfer. The key areas for growth policy include improvements in education and IT adoption, together with measures that enhance competition among firms. Fostering innovation and improving entrepreneurial activities in the EU is vital for economic growth.