Towards a New Approach for Upgrading Europe’s Competitiveness

by Christian Ketels and Michael E. Porter

Overview — Is the EU’s model of European integration a driver or a barrier towards higher European prosperity? This paper analyzes why the integration model that was successful in the past has lost effectiveness, and sets out strategic principles to guide a new approach. Integration remains key for upgrading European competitiveness, but needs to move towards a new form.

Author Abstract

The European Union is facing fundamental questions about its future direction. A key issue is the role of European integration in raising Europe’s competitiveness and prosperity. Market integration and regulatory alignment were a powerful tool to do so in the past but results have been increasingly disappointing over time. The new reality of the EU and its competitiveness challenges requires a more localized approach, with European institutions focusing on the integrity of the Single Market while supporting EU countries and regions in pursuing location-specific strategies. While there are signs of EU practice moving in this direction already, we argue that it will take more action and a more visible political decision to shift the way the EU is operating. The paper lays out key strategic principles to guide this new approach towards upgrading European competitiveness.