Jonathan Dingel at Trade Diversion draws our attention to an excellent set of papers published by the Economic Council of Finland on Challenges of globalisation for Europe and Finland. The papers were launched on 20 September at an event opened by Prime Minister Matti Vanhanen. The press release emphasises that the effects of globalisation are more diverse than estimated - and European competitiveness policy requires a great deal of work:
Globalisation creates much more subtle pressures for the worldwide re-allocation of production and employment than estimated before. Earlier, it was thought that competition from the developing low-wage countries only affected certain branches of industry and mainly low-paid workforce in the developed countries.
Recent research shows that competition may affect work regardless of education level. Moreover, changes in the competition may be very abrupt and hence hard to anticipate. This highlights the importance of economic adaptability and, in particular, the ability of labour markets and education systems to adjust. Provided that we have the ability to adjust and change, globalisation will be a good thing for Europe.
These are some of the conclusions made by Professor Richard Baldwin in his article, which is one of several papers constituting the first part of the study on the challenges of globalisation for Europe and Finland organised by the Secretariat of the Economic Council of Finland, published on Wednesday 20 September.
In addition to Baldwin’s article, the first part of the study includes eleven articles written by acknowledged European experts. Two of these articles are comments that complement Baldwin’s analysis. The remaining nine articles discuss the European competitiveness and structural policies, internal market issues, innovation policies in their broad sense, the European economic policy system and governance of globalisation.
Here are links to all of the research papers contributing to the globalisation project. Also worth reading is the executive summary (PDF):
• Globalisation: the great unbundling(s) by Richard Baldwin (GIIS, Geneva) 
• Challenges created by the new EU Member States and third countries by Mika Widgrén, (Turku School of Economics)
• Globalisation challenges for Europe: labour market perspectives by Torben Andersen (University of Aarhus)
• Competitiveness and structural policies: where does the EU stand? by Jean-Philippe Cotis and Jørgen Elmeskov (OECD)
• Dynamic effects of European services liberalisation: more to be gained by Henk Kox and Arjan Lejour (CPB, Hague)
• The liberalisation of network industries in the European Union: where do we come from and where do we go? by Damien Géradin (University of Tilburg)
• Effective innovation policies for Europe – the missing demand-side by Luke Georghiou (University of Manchester)
• Education and economic growth: a quick review of the evidence and some policy guidelines by Angel de la Fuente (Universitat Autonòma de Barcelona)
• Intellectual property rights in Europe–where do we stand and where should we go? by Dietmar Harhoff (Ludwig-Maximilians-University, Munich)
• Risk capital for growing world-class companies: challenges for European policy by Markku Maula (Helsinki University of Technology) and Gordon Murray (University of Exeter)
• The assignment principle and EU economic policy by Sixten Korkman (ETLA)
• The EU and the governance of globalisation by Alan Ahearne, Jean Pisani-Ferry, André Sapir and Nicolas Véron (Bruegel, Brussels)
What are the policy implications of this reserach? The press statement continues:
The articles imply a strong need to develop the European competitiveness policy in various policy sectors. The new challenges posed by global competition combined with, for example, population ageing underline the need to improve innovation activity, the education systems and the functioning of labour markets, product markets and markets for risk financing.
Many of the policy recommendations are familiar from earlier studies. For example, further investments in education and, at least in certain countries, in R&D find support. But the analyses also warn about excessive simplicity in policy. Efforts to raise education level by simply increasing the number of people with university degrees are not necessarily wise. Nor are such “investments in the information society” that merely aim to train, for example, more ICT specialists.
In several articles, attention is paid to the greatly differing performance of the European countries in employment creation and productivity growth. In many respects, the Nordic countries seem to fare very well. On the basis of the aforementioned differences, the authors stress the importance of national policies and the need to learn form other countries’ experiences. The success of European economies depends, ultimately, on the countries’ ability to implement reforms that contribute to growth and employment.
However, the Union must also do its share. New bold openings are required in innovation policy. In this regard, new technology development projects based on cooperation between European companies and the public sector constitute an important field of action. Europe should also finally get its incoherent patent system in order. The development of a European-wide services market and network industries will provide new potential which only wait to be exploited.
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