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A Deeper Union: From a Failed Project to the European Quality Lead



After President Trump’s departure, many expected that the transatlantic partnership would return to its previous state with the US playing a leading role. This article challenges that view. Instead, a new world order is foreseen, with different partnerships and spheres of influence. Europe can decide whether it wants to remain small and homogeneous or a larger but also more heterogenous Union that leads in welfare indicators such as life expectancy, fighting poverty and limiting climate change. Expanding this lead and communicating its uniqueness can empower Europe to combine enlargement and deepening, which appears unlikely without changes in governance and self-confidence.
Intereconomics 2021 | 3
European Integration
and healthcare, but there should be a fast-track system in
case of emergency, as has been painfully demonstrated
by the current coronavirus pandemic.
Europe benefi ts from globalisation but is reluctant to fi ght
to make it more socially and environmentally responsible
so as to fi t the European model. It has not set rules of re-
sponsibility for fi rms’ suppliers (chain responsibility).
Additionally, the EU is lacking an immigration strategy.
There is no blue card systems to make Europe attractive
to top-qualifi ed Indian or Chinese citizens. The EU does
not seek to limit disruptive immigration through education
and peace-building in Africa. Border countries take on a
disproportionate burden of this disruptive immigration.
A strong position in the new world order requires a deeper
Union to boost the EU’s lead in sustainability, one that
does not interfere but rather empowers and coordinates
local solutions.
Game changers on the road to a deeper Union
The following ten points of a reform agenda envisage a
double strategy for deepening the Union as well as offer-
ing partnership with neighbours. This needs ambitious
goals but empowering local innovations (Aiginger, 2017,
2021; Ketels and Porter, 2020).
Economic growth is rather low in Europe. The EU failed
at using information and communications technology to
accelerate dynamics and was slow to recover from the fi -
nancial crisis. During the COVID-19 crisis, the decline in
The COVID-19 crisis brought about new challenges and
opportunities for the European Union, as it did for the
entire world. After decades of eradication of extreme
poverty and limiting inequality through taxes, transfers
and cohesion policy, inequality between the periphery
and the centre is again increasing and some regions feel
forgotten. The population is ageing in many countries,
and this is often exacerbated by the emigration of young
people, making the regions they leave less attractive to
new fi rms.
New technologies and digital transformation stimulate
rm growth and could make life easier, but Europe lags
in research and development (R&D) relative to the US and
to the Asian tigers. Europe is still not attractive for the
best brains due to the limited number of top universities.
The access to health services is easy, but coordination
between member countries is limited, as demonstrated
by emergency units and reserves in essential supplies.
Testing procedures for new medications are accurate,
which is extremely important for the quality of medicines
DOI: 10.1007/s10272-021-0975-8
Karl Aiginger, Policy Crossover Center: Vienna –
Europe, Vienna; University of Economics and Busi-
ness Vienna, Austria.
Karl Aiginger
A Deeper Union: From a Failed Project to the
European Quality Lead
After President Trump’s departure, many expected that the transatlantic partnership would
return to its previous state with the US playing a leading role. This article challenges that view.
Instead, a new world order is foreseen, with different partnerships and spheres of infl uence.
Europe can decide whether it wants to remain small and homogeneous or a larger but also
more heterogenous Union that leads in welfare indicators such as life expectancy, fi ghting
poverty and limiting climate change. Expanding this lead and communicating its uniqueness
can empower Europe to combine enlargement and deepening, which appears unlikely without
changes in governance and self-confi dence.
© The Author(s) 2021. Open Access: This article is distributed under the
terms of the Creative Commons Attribution 4.0 International License
Open Access funding provided by ZBW – Leibniz Information Centre
for Economics.
ZBW – Leibniz Information Centre for Economics 175
European Integration
ductivity follows from high taxes on labour and low taxes
on energy and transport.
Reducing inequality
Europe has to reduce inequality within countries, across
regions, and – an aspect of increasing importance – be-
tween the core and the periphery (Aiginger and Kreuz,
2020), which would in turn limit nationalism. “Forgotten
regions” are a powerful source of populism and illiberal
democracy. This creates opposition to a deepening of the
EU and its ability to cope with new challenges.
Traditional policy instruments are needed to limit inequal-
ity, since the bulk of taxes are levied on wages (where
extremely high rates limit formal employment) or on con-
sumption. This could take the form of a combination of
standardising tax bases for corporate or inheritance tax-
es and pricing emissions, fi ghting base shifting and tax
evasion. New taxes on fi nancial speculations, plastic or
platforms would also reduce inequality. To achieve this
goal, member states must engage with each other, since
taxes are a national matter.
Reforming governance: Deepening and empowering
The request for unanimity of decisions in the European
Council has to be removed. The agreement of a sub-
group on an issue (enhanced cooperation) should be
used more often and welcomed by all European institu-
tions (today it depends on the pre-approval of the Euro-
pean Council).
The right of the European Parliament to start the legisla-
tive initiative should be established. For European elec-
tions, political parties at the European level should be
given preference.
Member countries that defy European decisions and
international compacts, or that do not respect human
rights and waive the division of power between the ex-
ecutive and legislative power or limit the freedom of the
media and universities should not receive substantial Eu-
ropean grants and subsidies.
Reforms should target problems with common interests,
strong external benefi ts and a high impact on future well-
being. However, it is important to distinguish between
principles and targets on the one hand and implementa-
tion on the other. Innovation is a process in which local
initiatives reveal unexpected gains. Thus, a deeper Union
that sets targets together and encourages bottom-up so-
lutions is better than central planning, and also prefer-
able to ambivalent, partly confl icting local priorities.
GDP in the fi rst year was stronger than in the US. This is
also predicted for the combined loss and expected gain
in 2021 and 2022, while China’s economy is expected to
expand in both years. The GDP per capita in the EU is one-
third lower than in the US, and the catching-up process in
labour productivity stopped in the last decades of the past
century. Europe should not mimic the US model; income
dynamics make it easier to prioritise equality and decar-
Closing the research defi cit
Modern growth theory tells us that insuffi cient research
is a root cause of lacklustre growth. R&D expenditure
as a share of GDP in the EU is about one-quarter lower
than in the US. R&D spending should have been raised
to 3% of GDP, according to the Lisbon 2000 strategy,
which intended to make Europe the “most competitive
region of the world”. As this did not materialise, the EU
2020 programme tried to enforce a “national ownership
of the strategy” by demanding that members set national
targets. But, fi rst, the sum of the national R&D goals did
not amount to the EU target, and second, member coun-
tries failed to reach their own goals. Actual expenditure
remained slightly above 2%, now trailing not only the US
at 3%, but also the Asian tigers and, since 2012, China
(OECD, 2014).
Redirecting productivity
Productivity growth allows for the same output with less
input. It is important to distinguish, however, which partial
productivity increases: it can be labour productivity or en-
ergy and resource productivity.1 These possibilities have
different policy implications (for more details, see Aigin-
ger, 2021).
Booming labour productivity exacerbates the growth im-
perative; if labour productivity grows by 3%, output must
increase at the same rate. Otherwise, unemployment will
increase and low-skilled workers will lose their jobs. In-
creasing energy and resource productivity also reduces
inputs and stimulates cost competitiveness, while at the
same time limiting emissions. Achieving the climate tar-
gets requires a reduction in greenhouse gases of 80% to
Redirecting productivity from its current focus does not
represent an unjustifi ed interference in a market econo-
my. On the contrary, the current dominance of labour pro-
1 For the sake of simplicity, we put aside capital productivity (both hu-
man and physical capital).
Intereconomics 2021 | 3
European Integration
From size to impact: Neighbourhood policy
A geopolitical role starts in the neighbourhood. Europe
has to build partnerships with neighbours in the East and
the South (Aiginger and Handler, 2018). Even if we argue
that the share of Europe in GNP, exports and manufactur-
ing is larger than perceived, it will shrink for a given geo-
graphical size. The EU can offer partnerships to its neigh-
bours since it is a continent with soft power that does not
intervene by military force. Europe’s leading role in fi ghting
climate change offers important technologies that “rising
Africa” can adapt to local needs, such as digital payments
and remote healthcare consultations, which have already
been used successfully. European engagement in Africa
is regarded with scepticism due to Europe’s colonial past,
and therefore the European Commission and members
without former colonies will have to lead.
The Recovery and Resilience Facility as a reform engine
The new Multiannual Financial Framework, as well as the
Recovery and Resilience Facility (RRF), could boost re-
forms. The latter is partly fi nanced by new European Safe
Assets, with common guarantees. The European budget
and the new facility should be used to increase dynam-
ics (as measured by GDP), productivity and research, but
even more support sustainability, energy and resource
conservation, and new clean technologies. To achieve
this, EU funding and national public expenditures have to
coordinate their goals, given that the EU budget amounts
to only 1% of GDP, while the national public expenditures
amount to 40%. The additional expenditures via RRF
increase the share of European expenditures for some
years to 1.8%.
The RRF is a combination of mandatory national plan-
ning and supranational control. It demands a focus on re-
forms, decarbonisation and digital transformation. Mem-
ber countries have to present regional plans in the fi rst
half of 2021 revealing national priorities. Fresh money
cannot be used for old projects. Together with reforms
in the European budget, this could redirect European
Changes have started
The new European Commission intends to reinforce Eu-
rope as a stronger partner at the global level and at the
same time increase the commitment and responsibility to
European citizens. The fi rst has been stressed by Com-
missioner Ursula von der Leyen’s intention to promote a
“geopolitical Commission” and “a Europe closer to citi-
zens, by supporting local led development strategies….
across the EU” (von der Leyen, 2019).
To limit global warming, goals must be set and their im-
plementation requires national and local initiatives. The
central authority must request local plans, monitor their
implementation and inform about best practices. It can-
not be acceptable that some regions use renewable en-
ergy while other countries build new coal plants. Even
cleaner heating with oil and gas is not compatible with
climate neutrality in 2050. Massive investment in energy
productivity and renewable energy, as well as better in-
sulation of buildings, must occur in all regions.
A deeper Union in the sense of common goals is not the
opposite of local initiatives; rather, it can encourage such
initiatives and make them more effective. And a larger
Union can gain the support of citizens, if they know that
European leverage on a global scale depends on Europe
negotiating together.
From size to impact: Media and external
The visibility of Europe in international meetings and
organisations should be heightened. A European seat
in the UN, the WTO, the IMF or the WHO would fi rst ne-
cessitate coordination between European countries, but
then increase their impact on global decisions and the
adherence of European countries to global decisions.
From size to impact: Promoting the euro as a transaction
The EU should promote the use of the euro as a reserve
currency alternative to the dominant dollar before the
renminbi assumes this role. The share of transactions
in euros is far lower than the trade volume of euro area
members.2 The creation of a euro debt market with high
liquidity would provide for international investors looking
for alternatives to the dollar, a process that began with
the European Stability Mechanism. European safe assets
should be promoted and the fi nancing of the Recovery
and Resilience Facility, with the same small common li-
ability of all countries for new debt, is a small fi rst step.
Currently only 23% of international loans are in euros
(more than 50% are in dollars); the market share for the
euro is at 16% of global foreign exchange turnover, and
the share of the euro in global foreign exchange reserves
is 20% (Baldwin and Weder di Mauro, 2020).
2 The euro has made inroads as a global payment currency, but its
share of 40% is still fi ve percentage points below that of the dollar,
though Europe’s trade share is nearly twice as high as that of the US
(European Commission, 2018; European Central Bank, 2020).
ZBW – Leibniz Information Centre for Economics 177
European Integration
Aiginger, K. (2017), How a strong Europe could create more national
scope of action, Intereconomics, 52(4), https://www.intereconom-
could-create-more-national-scope-of-action.html (15 April 2021).
Aiginger, K. (2021), What Role For Europe In The New World Order? A
Third Player Empowered By Green Productivity, Research in Econom-
ics and Management, 6(1).
Aiginger, K. (2021), European competitiveness and sustainable develop-
ment, Competitiveness Review, forthcoming.
Aiginger, K. and R. Kreuz (2020), Soziale Ungleichheit in Europa: Spreng-
kraft für die EU, Policy Crossover Center: Vienna-Europe Working Pa-
per, 5.
Aiginger, K. and R. Rodrik (2020), Rebirth of Industrial Policy and an
Agenda for the Twenty-First Century, Journal of Industry, Competition
and Trade, 20(2), 189-207.
Aiginger, K. and H. Handler (2017), Towards a European Partnership
Policy (EPP) with the South and the East. Fostering Dynamics, Fight-
ing Root Causes of Migration, Policy Crossover Center: Vienna-Europe
Working Paper, 3.
Baldwin, R. and B. Weder di Mauro (2020), Mitigating the COVID Economic
Crisis: Fast and Do Whatever It Takes, CEPR Press.
CEBR (2020), World economic league table 2021,
content/uploads/2020/12/WELT-2021-fi nal-29.12.pdf (15 April 2021).
European Central Bank (2020), The international Role of the Euro, htt-
en.html#toc (15 April 2021).
European Commission (2020), Coronavirus: the Commission mobilises all
of its resources to protect lives and livelihoods,
commission/presscorner/detail/en/ip_20_582 (15 April 2021).
European Commission (2018), Towards a stronger international role of the
euro, COM(2018), 796 fi nal.
OECD (2014), Do environmental policies matter for productivity growth,
OECD Economics Department Working Papers, 1176.
Ketels, C. and M. E. Porter (2020), Rethinking the Role of the EU in en-
hancing European Competitiveness, Competitiveness Review, 31(2).
Rodrik, D. (2020, 9 July), China as Economic Bogeyman, Project Syndi-
Schublach, S. (2021), Über den Führungsanspruch der USA in einer
veränderten Welt, Karl-Renner-Institut, Politik aktuell, 1.
von der Leyen, U. (2019, 16 July), Opening Statement in the European
Parliament Plenary Session.
The new world will not be bipolar
The new world order will be different post-COVID-19.
New challenges have come up gradually and have be-
come more visible during the pandemic. Crises should
make fi rms and governments rethink their position and
investments. Changes that are not made today will be
delayed for a long time. This year is a watershed moment.
Analysts predicting the future world order concur that it
will be dominated by China and the US, but both coun-
tries have demonstrated their limits as of late. China is
seen in a much more critical light due to domestic issues,
but also because it extends its borders clandestinely
and uses its investments to grab resources and create
dependencies. The US plans to return to its former posi-
tion, intent on assisting its fi rms so they can vanquish the
competition, contrary to WTO rules. The US lags in most
Sustainable Development Goals and in energy produc-
tivity. The Biden Administration cannot change this in the
next two years since it may lose its majority in the mid-
term elections.
The power of the EU in world politics can only be achieved
by de epe ning t he Uni on. Th is star ts by d efi ning the topics
that can best be solved together (and maybe those that
can be returned to members). Climate change, digitalisa-
tion, ageing, migration and the health crisis all need to be
and can be addressed more effi ciently if the European
governance system accelerates decisions, sets com-
mon goals and monitors adherence. The details need not
be fi xed centrally. On the contrary, due to new member
countries, the heterogeneity of the EU is increasing and
preferences become less homogeneous with rising in-
comes. The optimal strategy will therefore be to set goals
centrally and with global perspectives, while operation-
alisation is organised in the member countries if not in
the regions. This dual strategy will also help curtail popu-
listic and nationalistic backlashes motivated by a neglect
of regional diversity in the larger Union.
The autocratic tendencies in China and the political di-
vide in the US should effectively encourage Europe to
become more ambitious and self-confi dent. A deeper
Union that at the same time encourages regional initia-
tives could allow Europe to take more responsibility for
climate concerns, while limiting income differences and
boosting cooperation with its buoyant neighbourhood.
The result could be a multi-polar world, with Europe as a
quality player that offers its model to its neighbours while
learning from them.
Industriepolitik ist die staatliche Einflussnahme auf den industriellen Sektor. Ihr liegt die doppelte Erkenntnis zugrunde, dass erstens diesem Sektor in der längerfristigen Entwicklung von Ländern eine besondere Rolle zukommt und zweitens man diesen Sektor wegen hoher Konzentration und Innovationskraft nicht allein den Marktkräften überlassen kann. Ein hoher – zunächst steigender, später besonders in Industrieländern sinkender – Anteil der Industrie an der Volkswirtschaft eines Landes bestimmt seine Internationalisierung und globale Vernetzung. Das hat zuletzt auch der Aufholprozess asiatischer Länder gezeigt. Eine starke Industrie ist die Voraussetzung für das Europäische Wohlfahrtsmodell sowie die angestrebte Führungsrolle der Europäischen Union (EU) in Klimapolitik und Digitalisierung. Die EU hat durch seine Industrie zwar eine positive Außenhandelsbilanz, wird aber von den US-amerikanischen Großkonzernen und von China als nunmehr größte Industrienation herausgefordert.
Full-text available
Europe may emerge from the recent crisis stronger than before, as a player with a more sustainable democratic model than China and fewer political divides than the US. What reports tend to neglect is that Europe is currently the largest economic region, leading in exports, foreign direct investment, and most indicators on Sustainable Development. A reason for this downplaying is that Europe is seen as continent consisting of individual small and big countries and not as a political or economic whole. The paper takes an alternative position and carves out conditions for closing divides, to make existing European strengths more visible and extend the quality lead. The Recovery and Resilience Facility as well as the Multiannual Financial Framework must be used for reforms and coherence. A rebounding Europe requires a double strategy of fostering innovation while redirecting productivity towards energy and resource saving, away from its current priority on labour efficiency. This would empower Europe to be a quality player in a multipolar world in which there are no longer only two superpowers, China and the US, competing for attention.
Full-text available
20 How COVID-19 could be like the Global Financial Crisis (or worse) Nora Lustig and Jorge Mariscal Tulane University; Columbia University The world is living its worst scare since the Global Financial Crisis (GFC) in the form of COVID-19, now officially declared a pandemic. The virus that causes this disease, like the flu, affects the respiratory system, but it is potentially ten times as lethal. And, while the mortality rates are significantly lower than the South Asia Respiratory Syndrome (SARS), or the Middle East Respiratory Syndrome (MERS), the high contagiousness of COVID-19 has already resulted in thousands of deaths in China, and a rapidly rising tally in South Korea, Italy, the US and more than 100 countries. Will the socioeconomic toll be as large as that experienced during the GFC? • In the current health crisis, as in the GFC, it is apparent that the markets will not produce a solution, and that aggressive policy intervention and globally coordinated national action is needed to slow, and ultimately stop, the spread of the epidemic and to minimise the size and time length of its economic fallout. The parallels to the Global Financial Crisis are telling. Ubiquity It is believed that carriers of the virus can infect others even when they are asymptomatic, which makes comprehensive early detection virtually impossible because this fraction of infected population – no matter how small – can exist undetected among the healthy. This is, of course, similar to the subprime mortgages that were imbedded into securitised mortgage vehicles along with higher quality mortgages. While subprime mortgages were a small percent of the total (10-12%), it was virtually impossible to locate them when they started to default. This, together with efforts to selectively ‘quarantine’ – i.e. to bail out some but to sacrifice other financial institutions – led to a freezing-up of the banking and credit channels, and the Great Recession of 2008-09. Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes 186 • The efforts to contain COVID-19 have frozen many global supply channels; while • The fear of contagion is causing an unprecedented retrenchment in consumer demand. The two effects combined are near to the point of causing a global recession. Underestimation, denial, and unpreparedness In both the GFC and the COVID-19 crisis, policymakers initially played down the gravity of the problem. Analysts were also blindsided. • In 2007 and early 2008, rating agencies continued to attach low risk to collateralised debt obligations (CDOs) and collateralised mortgage obligations. Analysts relied on historical models of real estate price behaviour and saw a real estate downturn as improbable. • In the early stages of COVID-19, the Chinese government deliberately hid the high degree of contagiousness and even silenced those who voiced strong concern. In the US, there was a proactive effort to minimise the gravity of the health crisis by the Trump administration, and a very late start to testing and containment efforts. The lack of proper assessment of the threat and the inability to identify positive cases early on is at the root of the economic fallout. In order to avoid crushing the health system, social distancing has become the best (and perhaps only) way to slow-down the rate of contagion, and social distancing is at the root of the large-scale retrenchment of consumer demand that we are witnessing. Meanwhile, market analysts looked at the experiences of SARS, MARS, H1N1 and other infectious diseases to infer future economic and market behaviour, seemingly under-estimating how much more integrated the world has become, as well as the increased prominence of China in the world economy. The result was that in both crises, the institutional and regulatory frameworks, as well as the investment community, were unprepared for the dimension of the crises that ultimately ensued. The local became global • The Global Financial Crisis was initially perceived as a problem of the subprime mortgage segment in the US real estate market. How COVID-19 could be like the Global Financial Crisis (or worse) Nora Lustig and Jorge Mariscal 187 In a few months, it engulfed the global banking and financial sector, causing a degree of economic and social damage not seen since the Great Depression of 1929. • COVID-19 was initially seen as a Chinese or, at worst, an Asian problem. Like SARS and MERS, it was widely believed that it would remain regionally contained. However, with the Chinese economy coming to represent one third of global GDP, and its growing role in the high-tech industry, disruptions in manufacturing became evident even before the virus began to spread much outside of China. As the infection appeared in other countries, the consumer started to fear contagion. What lies ahead It is apparent that the current COVID-19 epidemic, like the GFC, is exhibiting the dark side of globalisation. It will first and foremost exhibit the deficiencies and strengths of national health systems. For example, one of the reasons why the virus may spread faster in the US than in other countries is that the law does not require employers to pay for sick leave, added to the estimated 15-20% of the population who is uninsured or under insured for medical benefits. These individuals are less likely to seek testing and medical treatment. It will also test the potential of the digital society, as at least for some time many may be forced to work remotely. The most important question is what the ultimate human and economic cost of the current crisis will be. China has managed to significantly slow the rate of contagion but at the cost of an economic recession. It remains to be seen if the epidemic resurges when containment restrictions are lifted. Will the current and coming economic slump in the US and the rest of the world be as deep as in the aftermath of the GFC? The degree and duration of consumer risk aversion will depend on the behaviour of the virus itself, the availability of effective antiviral treatment, and the wide availability of a vaccine. Will the virus slow down when the weather in the northern hemisphere warms up, as has been the case with the other coronaviruses? Will it become an incremental worry to our seasonal respiratory ailments? Will it mutate? There appears to be some negative correlation between temperatures in the infected geographical locations and speed of spread of the infection. But there is no certainty here, as this is a new virus and the world outside of China is still in the early stages of the pandemic. A vaccine is expected in about a year; treatments may come sooner. Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes 188 From what is known about the virus, it is reasonable to assume that in 12 to 18 months, the world may have a medical answer to COVID-19. • However, given the speed of contagion, the time horizon may as well be an eternity because at the current pace, the pandemic will overwhelm many national health systems and cause formidable economic and human damage. • It could also trigger a sequence of self-reinforcing negative dynamics that could outlast the epidemic. The weak link could be the global corporate credit markets. The last decade of low interest rates has led to a spree of debt issuance by corporations in China, the US, and Europe. The IMF has concluded that a downturn half as large as in the GFC would result in US$19 trillion of corporate debt for which revenues would not cover their interest expenses (IMF 2019). This could in turn threaten the health of the global banking system, extending the duration of the economic slump. President Trump recently declared that “this is not a financial crisis”. His speech writers left out the word “yet”. What should the US government do? In order to avoid extreme scenarios, like the GFC, authorities need to act swiftly in the following fronts: • Management of the crisis: testing, containment and treatment are the top priorities in the near term. Here, due to a late start, the US has much to catch up, with important lessons from successful containment efforts in China, Singapore, Israel and South Korea. • Easing monetary policy helps the home refinancing market but will not get frightened consumers out of their houses and into the stores. Additionally, given the low level of rates, the power of this tool is limited. However, asset purchases and credit facilities from the Fed to the banking and corporate sector could help ease the effects of an eventual corporate cash crunch, and worsening capital ratios. It is encouraging to see that the Fed has rolled out some of this in the last few days. • Targeted fiscal policy is likely to be more effective. How COVID-19 could be like the Global Financial Crisis (or worse) Nora Lustig and Jorge Mariscal 189 The Trump administration has announced federal funds for sick people to stay home and for their caregivers, and an extension of the tax filing deadline. Also, the administration is proposing to make available an additional $50 billion in low-cost loans for small enterprises, as well as $200 billion in undetailed liquidity into the economy, pending congressional approval. These are good steps, but more could be done to help those most vulnerable. Examples would be a temporary suspension of the payroll tax, an extension of unemployment benefits (even for those ineligible), and free medical coverage for those treated with the virus. Free medicine and baby-sitting vouchers are other examples. While many of these measures have been included in the coronavirus relief package agreed with the US Congress, they require quick and efficient implementation. This is also an opportunity to enact adequate reforms to health systems to ensure the provision of coverage for all who need it and require employers to pay salaries during sick leave. The government should be ready to provide support while legislation is approved. Concluding remarks In sum, it is likely that the impact of the current COVID-19 crisis will be more shortlived than the effects of the GFC. However, there is a non-negligible risk that this crisis could degenerate into something worse. We have discovered greater vulnerability than expected to bio-risk. And people know that there will be other viruses in the future, and there are also unknown risks due to climate change. • How long the fear from the current epidemic will last will depend on medical science, but also on people’s perceptions of having credible and timely information; adequate prevention, detection and containment policies; and effective management of resources and needs. The world is living through ‘war time’ conditions, and people need to know their government has their backs. References IMF (2019), Global Financial Stability Report: Lower for Longer, October, Aramonte, S and F Avalos (2019), “Structured finance then and now: a comparison of CDOs and CLOs”, BIS Quarterly Review, September. Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes 190 About the authors Nora Lustig is the Samuel Z. Stone Professor of Latin American Economics at Tulane University and a Nonresident Fellow at the Brookings Institution, the Center for Global Development and the Inter-American Dialogue. Jorge Mariscal is an Adjunct Professor in the School of International and Public Affairs, Columbia University.
Purpose This paper aims to review the evidence on Europe’s economic performance and on the role played by policies pursued at the European Union (EU) level, using the competitiveness framework as the conceptual lens. Design/methodology/approach Why has Europe not made more progress on upgrading its competitiveness over the past few decades, despite the many initiatives that the EU has launched? Findings It finds Europe’s sluggish performance to be driven by a failure to adjust the EU’s policy approach to fundamental changes in the competitiveness context and challenges faced by European economies. Originality/value Based on this analysis, the paper suggests a new role for the EU in supporting EU member countries and regions in achieving higher levels of competitiveness.
European citizens often assess EU policy as too centralistic and bureaucratic, causing them to vote for populist parties which promise to take “my country back” or even exit from the union. However, many problems — from climate change to the refugee problem — could be better solved at the European level. European policy should try to set rules which enable member countries to address different preferences based on national priorities. Best practices show that this strategy combining centralised policies and decentralised implementation is both feasible and welfare enhancing.
European competitiveness and sustainable development, Competitiveness Review, forthcoming
  • K Aiginger
Aiginger, K. (2021), European competitiveness and sustainable development, Competitiveness Review, forthcoming.
The international Role of the Euro
  • European Central
  • Bank
European Central Bank (2020), The international Role of the Euro, en.html#toc (15 April 2021).
Opening Statement in the European Parliament Plenary Session
  • U Von Der Leyen