By Martin Neil Baily and Jacob Funk Kirkegaard , Institute For International Economics, September 2004

". . . a timely contribution to a debate that deserves the closest attention: how to get faster economic growth so the essence of Europe’s social model can be preserved against a background of a rapidly changing world. . . . I warmly recommend it." Romano Prodi, President of the European commission

Europe grew rapidly for many years, but now, faced with greater challenges, several of the large economies in Europe have either failed to generate enough jobs or have failed to achieve the highest levels of productivity or both.

This study explores why Europe's growth slowed, what contribution information technology makes to growth, and what policies could facilitate economic transformation. It emphasizes a system with strong work incentives and a high level of competitive intensity. Europe doesn't need to eliminate its protections for individuals, the authors conclude, but both social programs and policies toward business must be reoriented so that they encourage economic change.

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Book Contents (Divided PDFs, Downloadable):

Preface 

Acknowledgments

1. New Policies and New Goals for Changing Times

2. Europe’s Postwar Success and Subsequent Problems

3. What Drives Productivity and How to Improve It in Europe

4. The Productivity Puzzle in Britain

5. Reforming the Labor Market and Social Programs

6. What Should Europe Do: Getting the Macroeconomics Right

7. Are Current Reform Efforts on the Right Track?

Appendix

References

Index

About the Author:

Martin Neil Baily, Senior Fellow since 2001, was chairman of the Council of Economic Advisers during 1999-2001, serving as an economic adviser to the president and a member of the cabinet. Dr. Baily was a principal at the McKinsey Global Institute in Washington, DC, from 1996 to 1999 where he was also a visiting fellow (1993–94). He was a coleader of projects on service and manufacturing productivity and employment, as well as a series of country studies on Brazil, France, Germany, Korea, the Netherlands, Russia, and the United Kingdom. Dr. Baily also served as one of the three members of the President's Council of Economic Advisers (1994–96), where he was responsible for macroeconomic policy as well as a range of microeconomic issues. He has been a professor of economics at MIT, Yale, and the University of Maryland.

Jacob Funk Kirkegaard is a research associate at the Institute for International Economics. Before joining the Institute, he worked with the Danish Ministry of Defense and the United Nations in Iraq. In 1996 he graduated from the Danish Army's Special School of Intelligence and Linguistics with the rank of first lieutenant.

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