Presentation on theme: "Smart growth: from indicators to policy"— Presentation transcript:
1Smart growth: from indicators to policy Statistics and evidence-based decision-makingAbout the unit: DG ENTR has one unit dealing with Europe It coordinates the a team of 27 country desk officers in the Directorate Industrial policy and Economic analysis.Task force on South East Europe 20203 July 2012José Angel BecerraEurope 2020 and National Competitiveness PoliciesEnterprise and Industry DG
2Objectives, indicators, policy Indicators to describe the competitive performance of the MSPolicy recommendations to improve performanceTwo forums for policy messages:Country-specific recommendations of the European Semester (May)Report on Member States' competitiveness performance and policies (September)- Industrial Policy Flagship (Communication of 2010) proposes among the key actions to follow more closely the industrial policies of MS since they have most of the tools to improve the competitiveness of EU Industry.This has translated into an annual report on Member States competitiveness performance and policies that we publish around the autumn.At the same time the Europe 2020 requires to develop a country knowledge.For the assessment we need a number of indicators to measure level and progresswe need to translate results into recommendations.
3Competitiveness and its indicators Report on MS competitivenessArticle 173 TFEUPublished yearly as part of the industrial policy packageHorizontal chapters focusing on policy areas26 indicators per Member State divided in four areasComparison to the EU averageNew in 2012: industrial performance scoreboardArt 173 gives mandate to develop industrial policy at EU level.Industrial Policy package has 3 main docs: 1) Communication on strategy at EU level; 2) MS report
4Horizontal focus in 2012 Industrial innovation Sustainability of industriesBusiness environmentAccess to financeRegulatory burdenServicesQuality of public administrationWe look at the 4 broad areas we think are the most relevant for the industrial/enterprise competitiveness in the EU = for smart growth.Innovation: the emergence of new nations with a great economic potential as competitors in global markets is a new challenge to the competitiveness of EU businesses.The coming to age of new technologies with revolutionary industrial possibilities makes innovation and indispensable need for the future of our industry.Sustainable: We have passed the "peak-oil" point and the industrial paradigm based on oil has begun its decline. Access to raw materials has become critical for the competitiveness of Europe in a number of industries.Investing in resource and energy efficient technologies and in the production of new innovative products is necessary if we want to remain a major actor in the world economy and provide jobs and high living standards to European citizens.
5Horizontal focus area: access to bank lending Analysis processIdentify countries that have a serious problem – based on both indicators and other evidenceExplore the reasons for the underperformanceWhat policy actions could improve the situation?Inside the business environment. This has gained in relevance with the crisis due to the credit crunch. It has become "the" most important concern of enterprises in many Member States. EU enterprises rely in 70% from the banking financing: little diversitification in financing instruments.Since the beginning of the financial crisis, SMEs have been particularly affected by tightening credit conditions and face difficulties in accessing financing. As a result of the slowdown, debt financing has become more expensive and difficult to obtain, and alternative financing instruments are often not fully developed in Member States.According to the survey, since 2009 the overall situation has deteriorated in more than half of the Member States. This was mainly caused by the overall tightening of credit standards due to the higher risk aversion of the banks. The results show that just under a fifth (19 %) of EU SMEs applied for a bank loan in the last 6 months of 2011, down from 26 % in Applications for bank loans were most common in France (31%) and Slovenia (30 %), while for SMEs in Germany, Italy and Poland there were significant drops in the proportion of firms applying for bank loans from SMEs in Ireland (12%) and Greece (11%) were most likely not to apply because of possible rejection. SMEs in Finland and Sweden were more likely than those in the other Member States to get access to bank loans. In Greece and Ireland the proportions that were rejected was significantly higher than the EU average.Score calculated from the Eurobarometer survey data with six indicators expressed as the percentage of respondents to the following questions: Net increase in the need for bank loans in the past six months; Not applying for a loan in the past six months for fear of rejection; Applying for a loan in the past six months but being rejected, or rejecting the offer because of too high costs; Net improvement in the availability of loans in the past six months; Net increase in the size of bank loans in the past six months; Net improved willingness of banks to provide a loan in the past six months. 0 indicates the worst possible situation and 1 the best possible one.Evidence: indicators and fact-finding missions in MS. Also surveys, dialogue with stakeholders (business associations).Data source: ECB/European Commission, DG ENTR calculations.
6Horizontal focus area: government effectiveness rank Government effectiveness captures perceptions of the quality of public service; the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies. A 'x percentile rank' implies that x percent of 213 countries in the world have a lower ranking on the indicator in that year.Data source: World Bank Governance Indicators 2011.The WGI summarize information from 30 existing data sources on view and experiences of citizens, entrepreneurs, and experts in public, private and NGO sectors.
7Horizontal focus area: efficiency of public administration The quality of public administration and institutions that govern economic and social interactions within a country is a fundamental factor in improving competitiveness and social well-being. At a time when governments are confronted with numerous challenges, including fiscal pressures and a decrease of trust in government.Member States’ administrations have also to deal with rapid economic change, complex regulatory issues, new technologies and services, and calls for openness, transparency and increased citizen participation.Firms interact with public administration in a variety of ways, for instance when registering the business, applying for licences, settling legal disputes or paying taxes. The efficiency and predictability of these interactions are important to economy-wide competitiveness, because they have a substantial impact on the costs and risks that companies face in investment decisions. In addition, firms indirectly depend on the public administration, as they are the prime beneficiaries of public goods and bear a large part of the overall tax burden.The high number of interactions between the public administration and enterprises, as well as the various channels of transmission through which administrative quality has an impact on a country's competitiveness make it difficult to fully capture the complexity of this relationship. Nevertheless – based on the elements of public administration which appear the most important for competitiveness – the quality of an administration to the business environment could be captured through the following categories of links (see Figure 1All these forms are caught in the graph of the slide.Data source: DG ENTR calculations
8Country indicators - Slovenia Modern and competitive industrySustainable industryBusiness environmentthis chapter focuses on recent innovation policy developments in the Member States, with particular attention paid to the business sector. Analysis based on performance indicators regarding innovation and research per Member State can be found in other publications of the European Commission (e.g.: the country reports of the Innovation Trendchart available at provide detailed information about innovation policies of the Member States).Entrepreneurship and SMEs
9Country indicators - Slovenia Modern and competitive industrySustainable industryBusiness environmentSustainable competitiveness refers to the promotion of economic growth and development while at the same time improving resource efficiency, minimising waste and strengthening energy security. The Annual Growth Survey 2012 highlighted the importance of unleashing the potential of green growth through enhancing structural reforms to create a new policy mix of regulatory, market and voluntary measures to promote investment in greening the European economy.Business environment: Business environment can be described as a set of conditions that affect a company's operations and include customers, competitors, suppliers, legislation and economic and political factors. The World Bank Report "Doing Business in 2012", confirms that OECD high income economies, by a large margin, have the world's most business-friendly environment. A good business environment requires rules that are efficient, transparent and provide certainty. The regulatory framework must contribute to achieving growth and jobs, while continuing to take into account the social and environmental objectives.Entrepreneurship and SMEs
10Country indicators - Slovenia Modern and competitive industrySustainable industryBusiness environmentPart of Public AdministrationEntrepreneurship and SMEs
11Europe 2020: the EU’s growth strategy Strengthened EU economic governanceMacro-economic & fiscal surveillanceRegulation of financial servicesTargets and guidance for structural reformsFlagships for smart, sustainable and inclusive growthDigital AgendaYouth on the MoveInnovation UnionNew Industrial PolicyNew Skills and new JobsPlatform against PovertyResourceEfficiencySmart growth means improving the EU's performance in:education (encouraging people to learn, study and update their skills)research/innovation (creating new products/services that generate growth and jobs and help address social challenges)digital society (using information and communication technologies)EU targets for smart growth include:1. combined public and private investment levels to reach 3% of EU's GDP as well as better conditions for R&D and Innovation2. 75% employment rate for women and men aged by 2020– achieved by getting more people into work, especially women, the young, older and low-skilled people and legal migrants3. better educational attainment – in particular: – reducing school drop-out rates below 10% – at least 40% of 30-34–year-olds with third level education (or equivalent)> All EU-level targetsTopHow will the EU boost smart growth?Through 3 flagship initiatives:1. Digital agenda for Europe Creating a single digital market based on fast/ultrafast internet and interoperable applications:by 2013: broadband access for allby 2020: access for all to much higher internet speeds (30 Mbps or above)by 2020: 50% or more of European households with internet connections above 100 Mbps.2. Innovation Unionrefocusing R&D and innovation policy on major challenges for our society like climate change, energy and resource efficiency, health and demographic changestrengthening every link in the innovation chain, from 'blue sky' research to commercialisation3. Youth on the movehelping students and trainees study abroadequipping young people better for the job marketenhancing the performance/international attractiveness of Europe's universitiesimproving all levels of education and training (academic excellence, equal opportunities)> All Europe 2020 flagship initiativesWhy does Europe need smart growth?Europe's lower growth than its main competitors is largely due to a productivity gap caused in part by:lower levels of investment in R&D and innovationinsufficient use of information/communications technologiesdifficult access to innovation in some sections of societyFor example:European firms currently account for just a quarter of the €2 trillion global market for information/communication technologies.Slow implementation of high-speed internet affects Europe's ability to innovate, spread knowledge and distribute goods and services, and leaves rural areas isolated.Education/trainingSome 25% of European school children have poor reading skillsToo many young people leave education/training without qualificationsNumbers attaining medium-level qualifications are better, but the qualifications often fail to match labour market needsUnder a third of Europeans aged have a university degree (40% in the US, over 50% in Japan)European universities rank poorly in global terms – only 2 are in the world top 20 (see Shanghai index (ARWU))Ageing populationsAs Europeans live longer and have fewer children, fewer people in work have to support higher numbers of pensioners, as well as fund the rest of the welfare system.The number of over-60s is now increasing twice as fast as it did before 2007 – by some 2 million a year instead of 1 million previously.A better knowledge economy with more opportunities will help people work longer and relieve the strain.Modernised EU levers for growth and jobsSingle Market ActTrade and external policiesStructural Funds and future EU budget
12EU targets agreed for 2020EMPLOYMENT 75% of the population aged should be employedINNOVATION 3% of the EU's GDP should be invested in R&DCLIMATE / ENERGY A reduction of greenhouse gas emissions by 20%A share of renewable energies up to 20%An increase in energy efficiency by 20%EDUCATION The share of early school leavers should be under 10%At least 40% of the younger generation shouldhave a degree or diplomaPOVERTY Lifting at least 20 million people out of povertyProposed by the Commission and agreed by the European Council in March 2010: all Member States were invited to set national targets on this basis.
13The European Semester timeline JanuaryFebruaryMarchAprilMayJuneJulyAnnual Growth Survey and other reportsProposals for country-specific recommendationsEuropean CommissionCouncil of MinistersDebate & orientationsDiscussion in Council formationsAutumn:Monitoring and peer review at European levelEuropean ParliamentDebate & orientationsEuropean Semester & national Semester.The policy recommendations of the European Semester should feed into the national budgets of MS which are usually prepared in the summer for adoption by the autumn in the Parliaments.To give sufficient time to MS, the Annual Growth survey is usually adopted in December and endorsed in the Spring EU summit.Spring EU summit: overall guidance on EU prioritiesEuropean CouncilEndorsement of country-specific recommendationsAdoption of National Reform Programmes (NRPs) & Stability and Convergence Programmes (SCPs)Autumn:Implementation at national levelMember States
14Annual Growth Survey 2012 Five priorities Key areas for action Pursuing differentiated growth-friendly fiscal consolidationRestoring normal lending to the economyPromoting growth and competitivenessTackling unemployment and the social consequences of the crisisModernising public administrationPursue country-specific strategies to fit national fiscal and macro-financial situationAdopt right mix of expenditure and tax shifts to maximise positive impact on growthStrengthen capital positions of key banksFacilitate more direct access to financingTap into existing sources: digital single market, internal market for services, tradeMobilise EU funds in support of growthFast-track key EU initiatives (cf. AGS annex)Pursue reforms for a growth-rich recoverySupporting employment, notably through a Youth Opportunities InitiativeProtecting the vulnerableImprove business environmentFacilitate absorption of EU funds- Put forward by the Commission on 23 November 2011 to map out the EU’s growth and jobs priorities in 2012 and launch a new European Semester.- The AGS sets out what the Commission believes must be the EU’s priorities for the coming 12 months in terms of economic and budgetary policies and reforms to boost growth and employment. Its presentation marks the opening of the second European Semester of economic governance.
15EU recommendations for national action in 2012/13 Note: Recommendations proposed by the Commission in May 2012 for For IE, EL, PT and RO, the only recommendation is to implement existing commitments under EU/IMF financial assistance programmes.Full text of recommendations at:
16BULGARIA Europe 2020 targets Euro Plus Pact commitments European semester recommendations for 2012/2013Employment/labour marketactive labour market policy: public employment servicessocial transfers and access to social serviceseducation reformStructural policies/competitivenesscompetition in electricity/gas marketspublic services: public procurement, administrative capacity, independence of judicial systemenergy efficiency/energy connectionsabsorption of EU fundsPublic financessound public financespension, education and health systemsstrengthen fiscal frameworktax compliance and shadow economyFinancial Sectoraccess to finance start-ups and SMEsEmployment: 76%R&D: 1.5%Tertiary education: 36%Early school leaving: 11%Greenhouse gas emissions: +20%Renewable energy: 16%Energy efficiency: 3.20 MtoeReduction of people at risk of poverty or social exclusion: (national definition)Employmentincrease labour participation, particularly of youth, elderly, disadvantaged groupsundeclared worklife-long learninglower labour taxesemployment servicesCompetitivenesswage setting mechanismspublic sector wage developmentscompetition in serviceseducation, R&D and innovationbusiness environmentSustainability of public financesalign pensions to demographyincentives for older workersnational fiscal ruleFinancial stabilitynational legislation for banking resolution or other measuresSource: European Commission. For more information, see:
17ROMANIA Europe 2020 targets Euro Plus Pact commitments European semester recommendations for 2012/2013Employment:70%R&D: 2%Tertiary education: 26.7%Early school leaving:11.3%Greenhouse gas emissions: +19%Renewable energy: 24%Energy efficiency: 10.0 MtoeReduction of people at risk of poverty or social exclusion:Employmentflexicurityincrease labour participationundeclared worklife-long learningCompetitivenesswage setting mechanismspublic sector wage developmentseducation, R&D and innovationbusiness environmentSustainability of public financesalign pensions to demographyincentives for older workersnational fiscal ruleFinancial stabilitynational legislation for banking resolution or other measuresThe only recommendation is to implement existing commitments under EU/IMF financial assistance programmesSource: European Commission. For more information, see:17
18SLOVENIA Europe 2020 targets Euro Plus Pact commitments European semester recommendations for 2012/2013Employment: 75%R&D: 3%Tertiary education: 40%Early school leaving: 5%Greenhouse gas emissions: +4%Renewable energy: 25%Energy efficiency: no targetReduction of people at risk of poverty or social exclusion:Employmentflexicurityincrease labour participationlife-long learningCompetitivenesswage setting mechanismspublic sector wage developmentscompetition in serviceseducation, R&D and innovationbusiness environmentSustainability of public financesnational fiscal ruleFinancial stabilitynational legislation on banking resolution or other measuresEmployment/labour marketlabour market participation (older workers)active labour market policieswage setting mechanismsflexicurityeducation, vocational education- matching skills to labour market needsStructural policies/competitivenessregulated professional servicespublic services and regulationPublic financessound public financespension systemfiscal frameworkFinancial sectormeasures in the banking sectoraccess to financeSource: European Commission. For more information, see:
19Are we likely to meet our targets for 2020? EMPLOYMENT 75% of the population aged should be employedINNOVATION 3% of the EU's GDP should be invested in R&DCLIMATE / ENERGY A reduction of CO2 emissions by 20%A share of renewable energies up to 20%An increase in energy efficiency by 20%EDUCATION The share of early school leavers should be under 10%At least 40% of the younger generation shouldhave a degree or diplomaPOVERTY 20 million fewer people should be at risk of povertyEurope 2020, the EU's ten-year strategy for smart, sustainable and inclusive growth, is more relevant than ever given the current economic climate. Yet progress by Member States towards the Europe 2020 targets has so far been disappointing. Moreover, the Commission's assessment is that at this point in time, national targets set by Member States are insufficient to meet most of the EU-level targets, particularly for energy efficiency. The latest statistics indicate that only in the area of education has some progress been made:- Education: The EU's target of not more than 10% early school leavers will not be reached on the basis of current commitments, which would bring it down to a level of 10.5%. In 2010, early school leaving dropped to 14.1% from 14.4% in But this masks wide variations between Member States. - Employment: If all Member States achieved their national targets, the EU as a whole would still be 1-1.3% points short of the agreed target employment rate of 75%. No substantial progress has been registered in 2011.- Research and Development: If national targets were reached, the EU would still fall about 0.3% short of the 3% 2020 target. R&D investment in 2009 stood at 2.01% of GDP, with little progress foreseen in 2011.- Poverty reduction: Based on current national targets, around 12 million people would be lifted out of poverty and social exclusion, short of the EU's 2020 target of 20 million.- 20/20/20 climate/energy targets: The EU as a whole is expected to meet the target of a 20% reduction in greenhouse gas emissions compared with 1990 levels. Some Member States though will have to amend their policies in order to reach their binding national targets. On energy efficiency, work is ongoing on the analysis of Member States' targets and a report will be presented in early The legally binding renewable energy target of 20% should be met if Member States fully implement their renewables action plans. At EU level, the share rose from 10.34% in 2008 to 11.6% in 2009.
20The EU is lagging behind its R&D target EU investment in R&D as a % of GDP in 2000, 2010 and 2020Business as usual*If national targets are met**EU target***≈ 2.7%%≈ 2.2%ii) 3% of the EU’s GDP should be invested in R&DOn the basis of current commitments, the Europe 2020 target will not be met.* Scenario based on the continuation of on-going reforms and financial efforts.** No targets set by CZ, EL and the UK: 2020 figures were estimated by Commission services. *** The EU target includes R&D expenditure by intergovernmental research infrastructureswhich is not included in the R&D expenditure of the Member States.Source: European Commission
21Levels of ambitions for R&D vary a lot R&D investments in the EU as a % of GDP2010 performance*2020 national target**EU target%Research, development and innovation are key sources of economic and productivity growth in the medium run and the EU has confirmed its commitment to spend 3 % of its GDP on research and development by 2020.Meanwhile, our competitors are pursuing very ambitious innovation policies as well: Japan has set itself the target of increasing its R&D expenditure to 4 % of its GDP by South Korea aims at an R&D intensity of 5 %, Singapore of 3.5 % and China of 2.5 %. It predicted that China is likely to overtake the EU by 2014 in terms of R&D intensity Innovation Policy Trends in the EU and Beyond, December 2011, available at* EL: 2007; AT, FI: **No targets set by CZ, EL and the UK. For CZ: a target (of 1%) is available only for the public sector. For IE: the target is 2.5% of GNP which is estimated to be equivalent to 2.0% of GDP. For LU: the target is between 2.30% and 2.60% (2.45% was assumed).Source: European Commission
22Long-term performances vary across the EU Productivity levels in 2011 and growth overROEU averageLVLTEESKCZ(in %, annual average )Hourly productivity growthBGPLHUSIIEUSJPUKFISEELEUATEU averageMTDENLPTESCYEAFRDKITBELUHourly productivity level (2011)Source: European Commission
23Links Report on MS competitiveness Monitoring Europe 2020 Monitoring Europe 2020