From the editor
Author | Laura Wallace |
Position | Editor-in-Chief |
Pages | 52 |
Page 52
On May 1, as fireworks illuminated Europe's skies from the Atlantic Ocean to the North Sea and the Baltic Sea to the Mediterranean, 10 countries joined the European Union (EU). With the new members, the EU swelled to more than 450 million people. For the first time, some former centrally planned countries, including three that had been part of the Soviet Union, were welcomed into the club-a culmination of the process launched with the tearing down of the Iron Curtain some 15 years ago. But the mood of elation was clouded by misgivings in Europe and elsewhere about the EU's ability to adjust to changing economic circumstances, given the lagging performance of many of its established member countries.
The June issue of F&D tries to shed further light on the challenges that an enlarged Europe now faces. Michael Deppler, head of the IMF's European Department, sets the stage by reviewing continental Europe's post-war economic history and asking whether the continent's twin paradigms of stability (or financial discipline) and solidarity (or social equity) will prompt the higher growth needed to sustain the social welfare state. We asked OECD Chief Economist Jean Philippe Cotis why Europe's growth is so anemic. He cites Europe's declining labor utilization (percent of the population that is employed) and, to a lesser extent, falling labor productivity growth. A bigger EU could boost the dynamism of labor markets throughout. But as Tito Boeri of Italy's Bocconi University notes, established EU members worry that...
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