28 Enterprise policy scoreboard 2003
| (25123)
15036/03
SEC(03) 1278
| Commission Staff Working Paper entitled "Benchmarking Enterprise Policy: Results from the 2003 Scoreboard"
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| Legal base | — |
| Document originated | 11 November 2003
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| Deposited in Parliament | 9 December 2003
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| Department | Trade and Industry
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| Basis of consideration | EM of 6 January 2004
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| Previous Committee Report | None
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
28.1 The Lisbon European Council of March 2000 set the EU the
strategic goal for the next decade of becoming the most competitive
and dynamic knowledge-based economy in the world, capable of sustainable
economic growth with more and better jobs and greater social cohesion.
28.2 This annual Commission staff working paper reports
on the 2003 scoreboard on competitiveness in the EU and aims to
contribute to the debate on policy for securing a better environment
for businesses. The scoreboard highlights areas where the EU
has made progress in its aim to be more competitive and areas
where it is lagging behind, particularly in comparison with the
US. It also allows Member States to compare their performances
in certain key areas. For the first time, it includes data on
the EU Accession and Candidate Countries.
The Commission Communication
28.3 The paper covers performance in 2002, which
it says was affected by an EU economy that was virtually stagnant.
Summarising its conclusions, the Commission notes that:
- Progress was made on:
- Internet penetration;
- falling communication costs;
- a growing proportion of tertiary graduates in
the 20-29 years old population;
- a rising number of business angel networks;[60]
- improved industrial eco-efficiency;
- e-government;
- reducing state aid and opening up public procurement.
- Setbacks occurred
as regards:
- the continuing decline of
the fledgling venture capital industry;
- shrinking market capitalisation;
- lower expenditure on Information Communication
Technologies (ICT) ; and
- a falling propensity to become self-employed.
28.4 Although the business environment as a whole
has been improving slowly, there is no indication that the gap
between the EU and the US has been narrowing. The EU is catching
up in areas such as human capital and take-up of ICT but the gap
in entrepreneurship, financial markets and innovation remains
as wide as it was five years ago.
28.5 The eight chapters cover: access to finance;
the regulatory and administrative environment; open and well-functioning
markets; entrepreneurship; human resources; innovation and disseminating
knowledge ("knowledge diffusion"); ICT; and sustainable
development.
28.6 Access to finance. The slowdown in growth
and the earlier bursting of the stock market bubble affected equity
markets adversely. Market capitalisation dropped substantially
in all Member States and nearly all found that new listings continued
to decline. Venture capital markets experienced serious strains.
One encouraging development was the increase since 1999, albeit
modest, in the number of networks of business angels, notably
in Sweden, Denmark, the UK, Spain and the Netherlands.
28.7 Many small and medium-sized enterprises (SMEs)
report that regulatory and administrative burdens remain
high, especially in Germany, France and Austria. Many Member
States now use the tool of regulatory impact assessments in an
attempt to reduce this burden. In addition to the UK, both Ireland
and Sweden have announced that they will submit all new business-related
legislation to impact assessment by 2006.
28.8 The role of open and well-functioning markets
is crucial for the growth of enterprises. However, the share
of international transactions in the GDP of each Member State
declined slightly, reflecting the general slowdown in EU economic
growth. The indicator for trade integration in 2000, 2001 and
2002 shows the UK as low on the graph, but above the US. The
paper makes the point that small Member States tend to present
higher rates. Whilst Member States are generally reducing state
aid and progress is being made in conforming to higher standards
of transparency in public procurement, trans-border public procurement
remains very low.
28.9 The rate of self-employment in 2002 remained
generally stable, at just over 13%, but the propensity towards
entrepreneurship, that is a preference for self-employment
as a professional option, fell from 51% in 2000 to 45% in 2002.
The female self-employment rate, at 10% lower than in the US,
signals an under-utilisation of this potential.
28.10 Turning to human capital, the paper
notes that, although the proportions are rising, tertiary graduates
constitute a considerably smaller proportion of the population
and the labour force in the EU than in the US. Little progress
has been recorded in raising participation in activities related
to life-long learning. However, performances in the UK, Finland,
Denmark, Sweden, and the Netherlands have all exceeded the EU
target of 12.5%, since at least 2000.
28.11 A variety of indicators, such as patents, innovations
or investment in research and development, show that the EU has
yet to improve its performance on innovation and knowledge
diffusion in a convincing manner. However, in the EU as well
as in the US, the number of patents has been increasing since
2000.
28.12 The impact of ICT on productivity in
recent years has been decisive. The EU's underperformance in
productivity growth reflects in part weakness in the pace at which
EU industries have made this effort to modernise. Data on 2001
and 2002 indicates that EU expenditure on ICT is catching up with
that of the US. At over 5% of GDP, Sweden and Ireland took the
lead, followed by the UK, Denmark and Finland, above the US.
Whilst rates of use of the Internet by businesses have risen markedly
across the Member States, e-commerce continues to be of secondary
importance for businesses, with many buying rather than selling
on-line.
28.13 EU manufacturers in virtually all Member States
have made significant progress in improving eco-efficiency in
recent years, with Ireland, Luxembourg, Finland and Germany showing
the most dramatic improvements. This progress is a reflection
of technological advances, particularly in the three most energy-intensive
sectors of iron and steel, chemicals and the non-metallic mineral
industries. The gradual increase in the share of services in
GDP has also played a part. Progress has been made in reducing
emissions of greenhouse gases, acidifying gases and ozone precursors.
The candidate countries need to improve their performance in
these areas.
The Government's view
28.14 The Minister of State for Industry and the
Regions, and Deputy Minister for Women and Equality, at the Department
of Trade and Industry (Jacqui Smith) comments that the paper is
a factual background document with no direct policy implications.
She adds, however, that the Commission may draw on this report,
along with other evidence, when formulating and considering policy
proposals.
Conclusion
28.15 The scoreboard provides a good deal of factual
information and highlights once again the strengths and weaknesses
of the EU economy. Whether these annual papers are of assistance
in pointing to remedies is less certain, though they may help
the Commission to formulate future policy proposals. Furthermore,
whether the Member States would be seriously disposed to administer
the medicines that might be proposed is also open to question.
28.16 The discrepancy between the sluggish performance
of the EU and the higher growth in productivity in the US continues
to be striking. Some comparisons in specific areas are instructive,
but what is lacking is a comprehensive in-depth analysis of why
the US does so much better. Possibly the Commission's draft Spring
Report will make an authoritative contribution in this respect.
According to press reports, it sets out in stark terms the reasons
for the widening economic gap and warns that, without substantial
improvements, "the Union cannot catch up on the United States"
by 2015. It also warns that China and India are becoming key
competitors. Apparently it spells out some improvements it believes
are needed, which include basic reforms, such as the introduction
of a single community patent and the recognition of professional
qualifications across the EU.
28.17 We now clear the document.
60 Business angels are private informal investors in
small start-up companies. They offer not only capital but also
management assistance and often pave the way for venture capital
investments. Business angels networks differ widely in size and
approach, but may increase transparency in the markets for these
informal investments. Back
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