Can Europe deliver growth? The SAPIR report and beyond. Bruges European Economic Policy (BEEP) Briefing 6/2004

In this critical appraisal of the SAPIR report of July 2003, we choose not to focus on the economic analysis provided in the Sapir Report - where we largely agree - or the analysis of governance questions and design at the EU level. Rather, we concentrate on the assignment, orientation and policy recommendations of the Report with the following question in mind: to what extent does the Report help to revitalize the growth debate in Europe? Unfortunately, the focus of the Report’s recommendations is entirely on the EU level of policy and governance, whereas the motor of growth is very clearly being hindered at the Member State level. The present authors suggest that a number of coordination processes at the EU level are best regarded as ‘dangerous liaisons’which are not really goal-oriented but instead ingeniously seem to serve to protect the actors’ autonomously-decided positions. The Union is trapped in a low-growth equilibrium due to this deceptive construction and because in many policy areas relevant for growth, the EU cannot act without the explicit consent of the Member States, or it simply cannot act at all. Indeed, given the single market and EMU, Europe can only deliver growth at the Member States' level. We exemplify this point in a number of concrete policy areas.

Economic Approaches of the Internal Market. Bruges European Economic Research (BEER) Papers 13/April 2008

What is ‘the’ EU internal market, as economists see it? The present BEER paper attempts to survey and help readers understand various ‘economic’ approaches to the internal market idea. The paper starts with a conceptual discussion of what ‘the’ internal market is (in an economic perspective). Six different economic meanings of the internal market are presented, with the sixth one being the economic benchmark in an ideal setting. Subsequently, the question is asked what the internal market (i.e. its proper functioning) is good for. Put differently, the internal market in the EU Treaty is a means, but a means to what? Beyond the typical economic growth objectives of the Rome Treaty (still valid today, with some qualifications), other Treaty objectives have emerged. Economists typically think in means-end relationships and the instrumental role of the internal market for Treaty objectives is far from clear. The ‘new’ Commission internal market strategy of 2007 proposes a more goal-oriented internal market policy. Such a vision is more selective in picking intermediate objectives to which ‘the’ internal market should be instrumental, but it risks to ignore the major deficits in today’s internal market: services and labour! The means-end relationships get even more problematic once one begins to scrutinise all the socio-economic objectives of the current (Amsterdam/Nice) Treaty or still other intermediate objectives. The internal market (explicitly including the relevant common regulation) then becomes a ‘jack of all trades’ for the environment, a high level of social protection, innovation or ‘Social Europe’. These means/ends relationships often are ill-specified. The final section considers the future of the internal market, by distinguishing three strategies: incremental strategies (including the new internal market strategy of November 2007); the internal market as the core of the Economic Union serving the ‘proper functioning of the monetary union’; and deepening and widening of the internal market as justified by the functional subsidiarity test. Even though the latter two would seem to be preferable from an economic point of view, they currently lack political legitimacy and are therefore unlikely to be pursued in the near future.