Out-Law / Your Daily Need-To-Know

EU faces widening gulf with the US

23 Nov 2001, 12:00 am

The European Union (EU) is lagging behind the US in terms of wealth and productivity per capita and the gap is widening. Gross Domestic Product (GDP) per head in the EU is less than two thirds of that in the US. The gap between the EU and US standards of living has never been this large since the late 1960s. The Competitiveness Report 2001 published by the European Commission attributes this to under-performance in the field of innovation and a slower introduction of information and communication technologies

Erkki Liikanen, Commissioner for enterprise, commented:

"While growth accelerated and employment increased in the EU in the late 1990s, the key question is why the EU nevertheless lost out to the US in terms of competitiveness and living standards. The Competitiveness Report 2001 singles out two important causes: weaknesses in EU's innovative performance and a slower introduction of new technologies."

In recent years, prices of information and communications technology (ICT) goods and services have declined at an extraordinary speed, while their quality has improved continuously. This has encouraged ICT investments throughout the economy. However, in the EU, ICT investments in the business sector have been smaller than in the US: in 1999, 2.4% of GDP against 4.5% in the US.

At the Lisbon Summit last year, the EU set itself the goal of becoming the world’s most dynamic high-tech economy by the end of the decade. According to these results, this goal may be difficult to achieve.