Thursday, March 08, 2007

EU 20 Years Behind US in Econ Development

As reported in today's IBD, a new study by Eurochambres (the European Chambers of Commerce) concludes that the European Union is 20 years behind the U.S. in economic development. Consider that:

1. The U.S. reached Europe's current level of economic development (measured by GDP per person) in 1985, 22 years ago.

2. The U.S. reached Europe's current level of productivity (expressed in GDP per worker) in 1989, 18 years ago.

3. The U.S. reached Europe's current employment rate and level of investment in R&D in 1978, 29 years ago.

4. The U.S. reached Europe's current level of Internet use 4 years ago.

What would it take for Europe to catch up to the U.S.?

5. If income (GDP per capita) grew in the US at 2% per year and in the EU at 3% per year, (a 1% higher growth of the EU), it would take the EU 38 years to catch up with the US, in 2045.

Why the difference? According to IBD, "the U.S. has smaller government, less regulation and much higher productivity. It also has what Nobel Prize-winning economist Edmund Phelps recently called "dynamism" — a culture of entrepreneurialism that doesn't exist in Europe."


At 3/09/2007 10:42 AM, Anonymous Sudha Shenoy said...

How can anyone display 'dynamism' in a political/administrative environment aimed at stifling, repressing, thwarting exactly such entrpreneurial activities?

At 3/09/2007 11:39 AM, Anonymous Walt G. said...

Do you have examples or data of what you mean by stifling, repressing, and thwarting?

At 3/09/2007 1:58 PM, Anonymous Bob Wright said...

How about this as an example of stifling, repressing, and thwarting:

"French MPs have effectively voted to relax the Socialist-era 35-hour limit on the working week, allowing private firms to increase working hours.

The National Assembly, dominated by the centre-right, voted by more than two to one to allow up to 13 hours' overtime.

Private sector workers will also be able to convert extra days off into wage rises or pension contributions.

Employers said the 35-hour week, introduced in 1998, had failed to create jobs and was uncompetitive.

The new law does not scrap the 35-hour week - it still applies in France's large public sector and it will remain the standard working week in the private sector.

But the changes will allow workers to work up to 48 hours a week - the maximum allowed by the European Union."

from the article that is here:

Why would the French government make it illegal to work more than 35 hours?

At 3/09/2007 2:12 PM, Anonymous Bob Wright said...

The government of France hires people to sit in company parking lots to monitor employees and make sure no one is working more than 35 hours.

Big brother really is watching you.

Talk about a waste of tax dollars.

At 3/09/2007 2:14 PM, Anonymous Bob Wright said...

France - 10% unemployment - the socialist paradise.

At 3/09/2007 2:26 PM, Anonymous Bob Wright said...

How about this from the International Herald Tribune.

You can find it here:

"The free movement of people inside the EU is one of the fundamental rights of the bloc's founding treaty. But today, with workers in Western Europe concerned about inexpensive labor coming from the east, it is also one of the most controversial. Citizens of the East European countries that joined the EU in May 2004 have the right to employment in only the three countries that agreed not to impose any restrictions: Britain, Ireland and Sweden. All other West European countries require work permits."

Try telling someone in Louisiana they need a work permit to work in Michigan.

This is European bureaucracy at its finest.

At 3/09/2007 2:32 PM, Anonymous Walt G. said...

Apparently, I am not clear about sudha shenoy's question. Is this a question about how Europe can ever achieve "dynamism" given its current policies, or how the U.S. is able to create "dynamism" with existing its polices?

At 3/09/2007 2:51 PM, Anonymous Bob Wright said...

Since the quote in the IBD article said the US has dynamism, I assumed that suda shenoy's comment must be referring to lack there-of in Europe - hence the economic malaise in Europe.

At 3/09/2007 4:40 PM, Anonymous Walt G. said...

Thanks. A lot of people are critical about U.S policy and think that it stifles, and represses, too. Sometimes it's difficult to know the context of an inquisitive remark.


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