: Knowledge Creation and Enhanced Investment Dynamics in a Europe with New Institutions

European economic recovery has made progress since the Banking and the Euro Crises, respectively, however there is still need for broader strategic growth progress in the EU. Following the BREXIT referendum result, medium term output forecasts for many European countries have seen a downward revision by the IMF WEO Update of July 19th, 2016. Europe could raise economic growth through a quintuple package: namely, a first element of growth-enhancing policy focusing on the Eurozone, a second element with emphasis on Eastern European EU countries and a third element with a broad emphasis on European infrastructure investment and digital modernization that would include the UK and other non-EU countries in Europe. The list of 11 growth drivers identified by MGI could largely be implemented at the national policy layer. Moreover, the Eurozone countries could adopt a virtual fiscal policy fund for part of both infrastructure and military expenditures so that a better policy mix and more efficient stabilization will be achieved. The UK and the EU27 countries should agree to set up a joint climate R&D funding agency in which the UK and the EU27 would jointly contribute funds so that sustained green innovation and growth projects could be financed in Europe. Beyond new institutions, other growth-enhancing measures which have a clear analytical basis should be adopted. A growth-enhancing G20 element as a follow-up to the Brisbane summit approach would be useful. A decisive focus of a success-promising plan for a dynamic EU27 and Europe, respectively, should be on understanding that the 21st century will be largely digital, shaped by Asian countries and Schumpeterian dynamics. Thus, securing FTAs between the EU and ASEAN, Japan and India are key challenges. A special joint fund for training/retraining in Eastern Europe would also be useful for economic convergence and reduced inequality.