Spillovers from economic reform

In March 2000, the heads of the European Union countries proclaimed the aim of making Europe the “most competitive and dynamic knowledge-based economy in the world, capable of sustaining economic growth with more and better jobs and greater social cohesion” by 2010. To achieve this overall goal, a set of economic and social reforms called the “Lisbon Strategy” or the “Lisbon Agenda” to be undertaken was defined. Several objectives, grouped in five dimensions (employment, innovation and research, structural economic reforms, social cohesion, environment) were set up. It was agreed upon that the European Commission should annually prepare progress reports in order to evaluate the progress the Member States have made in achieving the Lisbon goals. In its mid-term review in 2005, the European Commission concluded that the implementation of reforms in line with the Lisbon Strategy had in many areas been too slow. In particular, the growth performance of the past five years had been disappointing, particularly as compared to other regions of the world economy such as the US and certain Asian economies. Therefore, the Lisbon Strategy was revised, focussing on growth and the creation of employment (European Commission, 2005 and 2006).