At a UCLA forum, two economists advanced different reasons why Europe's GDP hasn't caught up with that of the USA, specifically those of the EU-15.
Gianni Toniolo put forth that "Europeans place a higher value on leisure" than Americans. This translates into fewer hours per week spent at work, among other things. Barry Eichengreen said that "Europe's institutions need to change". Various institutions hamper competitiveness and limit the adaptation to the demands of global competition.
Already, we're seeing movement on both fronts. Last week, a vote by French legislators indicated that they were serious about eliminating the 35-hour work week; trade unions and popular sentiment may offer resistance. Germany is injecting funds into their education system to create elite universities to attract world talent and stem a brain drain; it appears such universities would be able to charge tuition fees, set pay rates, and select which students they accept.
The EU has little choice if it is to reduce dependence upon the USA for economic growth as well as compete with Asian economies. The ongoing decline of the US dollar relative to the Euro, with its attendant impact on the China yuan, is surely driving that point home.
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