A New Competitiveness Approach in the European Union: Dealing with Misconceptions

This paper investigates the renewed interest in competitiveness which can be witnessed in the EU once the acute phase of 2008+ crisis abated. This revival is expressed in several initiatives, such as the idea to set up national competitiveness boards, the Euro Plus Pact or the ECB research network CompNet. By reviewing the recent literature and experts’ opinions as well as drawing on the new theoretical approach and the insight from the German reunification, this papers identifies main promises and pitfalls of selected European proposals. In particular, it stresses the need of a more nuanced approach to competitiveness, which goes beyond the narrow perspective centred on the synchronisation of cost developments. The evolution of salaries and productivity must be aligned and certain level of convergence among the European Monetary Union members is necessary. Nevertheless, reducing competitiveness to such an issue seems inadequate, as it ignores the ‘high-road’ and ‘beyond GDP’ competitiveness which is the reality for the mature European economies.