Magdalena Tusińska “Q e bumpy road to a competitive economy – economic governance Journal in the ”, Journal of International Studies , Vol. 7, No 3, 2014, pp. 32-43. of International DOI: 10.14254/2071-8330.2014/7-3/3 Studies cPapers

© Foundation  of International $ e bumpy road to a competitive economy – Studies, 2014 © CSR, 2014 economic governance in the European Union Scienti

Magdalena Tusińska University of Economics in Katowice e-mail: [email protected]

Abstract. Over the last few years the European Union and its Member States have made Received : June, 2014 a series of important decisions that imply stronger economic coordination in the EU 1st Revision: as a whole, particularly for the area. Q e ine[ ectiveness of the pre-crisis govern- September, 2014 ance based mainly on an open method of coordination was the trigger of these chang- Accepted: October, 2014 es. Q e aim of this paper is to discuss a deepening of economic integration and of po- litical coordination. Q e emphasis is put mostly on the matter of competitiveness. Q e DOI: novelty of this paper consists of linking the criticism of the “old economic governance” 10.14254/2071- with recently implemented mechanisms. Q e elements of the new economic govern- 8330.2014/7-3/3 ance correct the weaknesses of the foregoing methods, yet bring forth other obstacles.

We can’t solve problems by using the same kind of thinking we used when we created them Albert Einstein Keywords: macroeconomic policy coordination, European Union, Member States, eco- nomic governance, competitiveness JEL Classi# cation: E601, F 360, F550

INTRODUCTION Q e renewal of the European development model and the rede" ned role of the European Union (EU) in the new post-crisis international order is guided by “” as a successor to a decade-long experi- ence of transnational coordination of economic and social policies framed by the Strategy (LS). Q e formulation of the new Strategy took place in a context which is very di[ erent from that of the original Lisbon Agenda in 2000. Q e EU’s interdependent economies are still reeling the impact of the " nancial and economic crises and their long-term consequences, including the situation of public " nances and deteriorat- ing labour markets. Q e focus of Europe’s long-term challenges has also shifted. Global competition coming from emerging countries has added to the concern that the EU is falling behind the United States and Japan in terms of productivity growth and innovativeness. Q e crisis was in fact a breakthrough inspiring a thorough assessment of the EU’s experiences. One conclu- sion could be that the solution to coming challenges involves deepening economic integration and increased

32 The bumpy road to a competitive economy – Magdalena Tusi Ñska economic governance in the European Union political coordination. It is believed, that stronger governance is needed to ensure progress and achieve contem- porary goals. Q e response to such a demand is not only in the form of the aforementioned Strategy “Europe 2020”, but also other in other mechanisms which have been introduced or at the very least proposed. Q e topic of the economic governance is very broad, thus the area of consideration has to be narrowed down – the paper aims to contribute to the debate on the current governance of the EU’s competitiveness. It critically assesses the results of implementing the LS and considers how the mechanisms of its successor, as well as of other new instruments, have been improved. It is not about the content of the documents, but rather a modi" cation of some mechanisms in Europe in the discussed topic, which may shed new light on the current governance. Q is paper presents the results of research based on the review of economic literature as well as EU documents and reports. Q e article is structured into six parts. Following the introduction, a concise overview of the key de" ni- tions is provided. Q is is followed by a short description of the EU’s situation in terms of its competitive- ness. Q e next part looks back on the governance of the LS, providing a short overview of the open method of coordination (OMC). It enables one to realise how considerable the scale of the current changes is. Q e subsequent part examines the new governance architecture for EU policy coordination after 2010. Q e new rules are presented not only as a description, but also, as a response to the criticism of the old governance. In the " nal part of the analysis there is a display of the main " ndings leading to the conclusion of the article.

COMPETITIVENESS $ THE NOTION AND WAYS OF GOVERNANCE Q e term “competitiveness” is a catchall phrase used nowadays in a variety of contexts. Among many existing criteria (Pietrucha & Czech-Rogosz &Tusińska, 2013; Tusińska, 2014), it can be interpreted in two ways, namely: price competitiveness and non-price competitiveness (which is more controversial). Some of the de" nitions for both types of competitiveness as well as their issues are presented in table 1: Some authors writing about non-price competitiveness do so with regard to innovativeness claiming that the latter is a fundamental part of the foremost. It is di? cult to deny, because implementing usually brings higher productivity, though de" nitions of competitiveness based solely on innovativeness seem to be too narrow. Q e same imputation can be raised with regard to the de" nitions popular in the past which focused on the ability of an economy to sell products and services on international markets. Q us, the de" nitions presented in table 1. seem to be more suitable. Regardless of the slight di[ erences between these de" nitions, an economy which is competitive in any of the ways mentioned above, gains more bene" ts from international cooperation. A more competitive economy is likely to sustain growth, additionally it en- sures socio-economic welfare to its citizens. Q us, the term “competitive” always has a positive connotation and most countries are competitiveness-oriented – at least in their economic policies. In other words, an economy which is more likely to sustain growth seems to be more competitive. Gaining, keeping and enhancing the competitiveness of any entity requires the ability to think strategi- cally. Apparently, the formulation of programmes or mechanisms by various institutions is an expression of that particular way of thinking. A premise to elaborate on that approach is the con" dence that individual e[ orts are not enough to ensure the economic success of an entire country or a group of countries – there is a serious demand for a vision which provokes collective actions. Q e vision can be embodied in a strategy utilized and designed to modernise a country (a group of countries) by introducing structural reforms to prepare its economy for new challenges. It can be identi" ed with the procedure of setting long-term priori- ties for economic systems, modi" cations of goals adjusted to predictions and current changes, indicating the

33 Journal of International Studies Vol. 7, No.3, 2014 amount and type of resources crucial for the achievement of such goals, and then with the means by which such factors can be obtained and rationally allocated within the particular system (Gościński, 1992, p. 32).

Table 1 Q e de" nitions and features of price and non-price competitiveness

3ULFHFRPSHWLWLYHQHVV 1RQSULFHVFRPSHWLWLYHQHVV – PHDVXUHGZLWKWKHQRPLQDOHIIHFWLYHH[FKDQJHUDWH – WKHFDSDFLW\RIFRPSDQLHVLQGXVWULHVUHJLRQVQDWLRQVDQG 1((5 RUPRUHIUHTXHQWO\ZLWKWKHUHDOHIIHFWLYH VXSUDQDWLRQDOUHJLRQVWRJHQHUDWHZKLOHEHLQJFRQWLQXRXVO\ H[FKDQJHUDWH 5((5  3LHWUXFKDHWDOS H[SRVHGWRLQWHUQDWLRQDOFRPSHWLWLRQUHODWLYHO\KLJKIDFWRU – WKH1((5 ³WUDGHZHLJKWHGFXUUHQF\LQGH[´ WUDFNV LQFRPHDQGIDFWRUHPSOR\PHQWOHYHOVRQDVXVWDLQDEOHEDVLV FKDQJHVLQWKHYDOXHRIDJLYHQFRXQWU\¶VFXUUHQF\ +DW]LFKURQRORJRXS  LQUHODWLRQWRWKHFXUUHQFLHVRILWVSULQFLSDOWUDGLQJ – PRUHGLI¿FXOWWRDVVHVVWKDQSULFHFRPSHWLWLYHQHVVEHFDXVH SDUWQHUVLVFDOFXODWHGDVDZHLJKWHGDYHUDJHRI WKHLPSDFWLVSXWRQWKHSRWHQWLDOFDSDELOLW\RIDQHFRQRP\ WKHELODWHUDOH[FKDQJHUDWHVZLWKWKRVHFXUUHQFLHV ZKLFKVHHPVWREHXQPHDVXUDEOHWKRXJKVRPHRUJDQLVD 3LHWUXFKDHWDOSS  WLRQV OLNH:RUOG(FRQRPLF)RUXP±:(),QWHUQDWLRQDO – 5((5DLPVWRDVVHVVDFRXQWU\¶VSULFHRUFRVW ,QVWLWXWHIRU0DQDJHPHQW'HYHORSPHQW FRQVWUXFWUDQNLQJV FRPSHWLWLYHQHVVUHODWLYHWRLWVSULQFLSDOFRPSHWLWRUV RIFRXQWULHVRQWKHEDVLVRIDJJUHJDWHGLQGH[HVRIFRPSHWL LQLQWHUQDWLRQDOPDUNHWV,WFRUUHVSRQGVWRWKH1((5 WLYHQHVV GHÀDWHGE\VHOHFWHGUHODWLYHSULFHRUFRVWGHÀDWRUV – DVHWRILQVWLWXWLRQVSROLFLHVDQGIDFWRUVWKDWIDFLOLWDWHSUR %RVVDNSS3LHWUXFKDHWDO GXFWLYLW\LQDJLYHQFRXQWU\7KHSURGXFWLYLW\GHWHUPLQHV SS  WKHOHYHORISURVSHULW\WKDWFDQEHDFKLHYHGDVZHOODVWKH – PRUHLPSRUWDQWRQORZHUVWDJHVRIGHYHORSPHQW UDWHVRIUHWXUQRQLQYHVWPHQWV7KHVHLQWXUQDUHWKHIXQGD – WKHODFNRIVXFKFRPSHWLWLYHQHVVLVXVXDOO\HTXDOWR PHQWDOGULYHUVRIWKHHFRQRPLFJURZWKUDWHV :() H[WHUQDOLPEDODQFHLQWHUSUHWHGDVJURZLQJGH¿FLWLQ  S  DFXUUHQWDFFRXQW Source: Own compilation

Considering such a programme for a group of national economies, like the EU consisting of 28 countries, the task becomes even more complicated, because “one size does not " t all”. Another challenge is in how to en- force the implementation of the structural reforms among the countries. At some point, when some of the Mem- ber States (MS) had been falling behind in terms of their competitiveness, an apparent inability to deal with such problems was revealed. Some negative trends have been observed in both aspects of competitiveness, namely: –Q e asymmetry of price competitiveness among euro zone countries – the years preceding the crisis were marked by striking external and internal macroeconomic imbalances. Q e loss of price competitiveness linked mainly with the growth of unit labour costs (ULC) resulted in growing current accounts de" cits of euro zone peripheral countries (i.e. , Ireland), whereas considerable surpluses could have been observed in the balances of payments (BOP) in the core economies, being a good example (Pietrucha et. al, 2013). –Q e asymmetry of non-price competitiveness among EU countries – as in previous years, the current year’s top 10 (according to WEF) remain dominated by some European countries, with , Ger- many, , the , and the con" rming their places among the most competitive economies. In contrast some European countries occupied very di[ erent positions, for example: Poland – 42nd, – 51st, – 76th, – 78th, Greece – 91st; assessing the competitiveness landscape of 148 economies (WEF, 2013). Q ese asymmetries have had a negative impact on the condition of the EU as a whole and contributed to the scale and the consequences of the crisis which, using the words of J.M. Barroso, (...) has also exposed some fundamental truths about the challenges that the European economy faces . And in the meantime, the global

34 The bumpy road to a competitive economy – Magdalena Tusi Ñska economic governance in the European Union economy is moving forward (, 2010b, p. 2). During the " rst decade of the current century the growing asymmetries were accompanied by the Lisbon Strategy.

THE LISBON STRATEGY AT A CRITICAL GLANCE It seems to be ironic that a decade which started with such high hopes for Europe ended with the crisis – a long way from the ambition declared in the LS to make the EU the most dynamic and competitive knowledge- based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment by 2010 (Lisbon , 2000). Only in 2004 did this over-ambitious priority turn out to be unrealistic, but what seems to be crucial given the topic of the article is that the weak economic governance contributed to such poor results through the implementation of the Lisbon reforms. It was stated: External events since 2000 have not helped in achieving the objectives but the EU and its Member States themselves have clearly contributed to slow progress by failing to act on much of the Lisbon Strategy with su/ cient urgency. Such a disappointing delivery is due to an overloaded agenda, poor coordina- tion and con4 icting priorities. Still, a key issue has been the lack of determined political action (the High-Level Group, 2004, p. 6). In the EU, a strategy is a top-down agenda consisting of general and operational objectives. It is part of a so-called “soft law framework” (Ryszkiewicz, 2013, pp. 75-76, 80), because the European strategies are implemented according to the OMC which was presented as an designed to manage the imple- mentation of a vast reforms package that could not be implemented merely through legislative means. Q e OMC was deployed as an instrument of governance that sets its voluntary nature and conviction as a coun- terweight to approaches of a compulsory legal nature. So was the LS, a multi-sectoral programme based on lax transnational cooperation as well as common and shared e[ orts. (Collignon et.al, 2005; , 2010). Q e key components of the OMC are notably common objectives, commonly agreed EU indicators, EU monitoring, peer review, and evaluation of national strategies (Zeitlin 2010, pp. 253-273). It is important to mention that the national strategies (National Reform Programmes – NRPs) were added only in the relaunched LS (in 2005 – after midterm review) as an element of the improved govern- ance which was supposed to enhance freedom for the MS to set their own priorities. Additional elements of the modi" ed governance were also a link to the cohesion policy of the EU and 24 Integrated Guidelines for Growth and Jobs (IGs) as a policy instrument aimed at development and implementation of the LS. In spite of such changes, the LS has only brought limited results undermining Europe’s credibility, and questioning its capacity to adapt its economic and social model to a more challenging world. Q e impres- sion that the countries did not take ownership and “sell” the project at home was also unfortunate. Q e gap between the best performers and the laggards was arguably wider in 2010 than it had been in 2000. An ex- ample, Greece and Portugal were falling behind in terms of the reforms, whereas Germany and Scandinavian countries were forging ahead. It is impossible to conclude expressly how the reforms would have progressed in the absence of the Lisbon Agenda. However, it is hard to not think that most MS reform paths would not have been very di[ erent if the LS had never existed, because there has been no more policy convergence within the EU than there has been between the OECD countries. Q us, the LS may have had a modest in^ uence on the reform process in some of the smaller economies, but in the larger ones, reforms have been driven by domestic political dynamics, not an external pressure (Tilford & Whyte, 2010, p. 3). An additional factor was adopting 10 much poorer countries in 2004. In spite of the fact that those economies were catching up, an income per head in new Member States contributed to a diminishing average income throughout the EU as well as increasing the gap between the EU and the USA.

35 Journal of International Studies Vol. 7, No.3, 2014

Q e LS formally elapsed in June 2010 with the adoption of “Europe 2020” leaving the EU at a cross- roads and in political agreement that they need to be equipped with a broader and more e[ ective set of policy instruments to ensure future prosperity and standards of living.

THE NEW GOVERNANCE OF COMPETITIVENESS “Europe 2020” puts forward three mutually reinforcing priorities (smart, sustainable, inclusive growth) and proposes headline measurable targets concerning employment, research and innovations, natural en- vironment, education and reducing poverty (European Commission 2010b, p. 32). Q e topic of the com- petitiveness is interpreted very broadly. It concerns not only a matter of enhancing innovativeness, but also social issues are highlighted. Q e Strategy brings together a common economic agenda and a stronger EU surveillance framework, which should be decided upon and monitored in a synchronised manner. A visual representation of the Strategy governance is given in Figure 1.

Fig. 1. Governance of the “Europe 2020” Strategy Source: European Commission (2010c, p. 2).

Q e scheme presents the responsibilities of the Union and the national level, at the same time providing the general view on the new policy coordination and the main strands of the governance of the Strategy. Overall, progress towards the “Europe 2020” targets is monitored as part of (ES) in the EC’s annual cycle to align " scal, economic and structural policy coordination. It means that these topics are considered concomitantly. Within the framework of the ES, the Commission monitors the devel- opment along the dimensions of macroeconomic factors, public " nances and growth-enhancing reforms, with the current strategy belonging to the latter (Ośrodek Informacji i Dokumentacji Europejskiej, 2013).

36 The bumpy road to a competitive economy – Magdalena Tusi Ñska economic governance in the European Union

Q e 5 EU headline targets and the 10 IGs serve as a policy framework for the production of NRPs. Q e 5 targets for the EU in 2020 are: –75% of the 20-64 year-olds to be employed, –3% of the EU’s GDP (public and private combined) to be invested in R&D/innovation, –greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990, –20% of energy from renewables, –20% increase in energy e? ciency, –reducing school drop-out rates below 10%, –at least 40% of 30-34–year-olds completing third level education, –at least 20 million fewer people in or at risk of poverty and social exclusion. Q is limited set of EU-level targets is translated into national targets in each EU country, re^ ecting dif- ferent situations and circumstances (European Commission, 2010b). Q e Stability and Growth Pact (SGP) is the framework for the establishment of Stability and Conver- gence Programmes (SCPs) that are the countries’ plans for sound public " nances and " scal sustainability (for euro area countries, these are called Stability Programmes; for other MS – Convergence Programmes). Q e concrete priorities for a given year are detailed by the Commission in its Annual Growth Survey (AGS) by setting out more immediate actions for the coming months. In the European Semester the instruments of the SGP and the “Europe 2020” Strategy are aligned, while retaining their legal speci" cities (indicated in Fig. 1.). Q e new coordination should support competitiveness, as well as stable public " nances. In order to progress towards the “Europe 2020” goals, the Commission has come forward with a set of seven ^ agship initiatives covering: “A Digital Agenda for Europe”, “Innovation Union”, “Youth on the Move”, “Resource E? cient Europe”, “An Industrial Policy for a Globalisation era”, “An Agenda for New Skills and Jobs”, “European Platform Against Poverty” (European Commission, 2010b, p. 35). Among the levers there are: single market relaunch, trade and external policies and the EU " nancial support (European Commission, 2010c, p. 3). Q e governance of the Strategy is based on three integrated strands: macro-economic surveillance, the- matic coordination and " scal surveillance under the SGP. Q e " rst strand ( Fig. 1.) is to ensure a stable macroeconomic environment conducive to growth and employment creation, taking account of spill-over e[ ects across the Members. In accordance with the IGs, it will cover macroeconomic and structural policies to address macroeconomic imbalances, macro" nancial vulnerabilities, and competitiveness issues which have a macroeconomic dimension. Following a two-stage approach, the Commission has proposed a mechanism comprising a preventive arm and a corrective arm (European Commission, 2010a, pp. 3-4; European Commission, 2011). Q e preventive arm with annual assessments of the macroeconomic imbalances risk includes an alert mechanism consisting of a scoreboard of external and internal indicators and alert thresholds, comple- mented by more qualitative analysis (the assessment of such indicators should be done by the Commission based on in-depth reviews, SCPs and NRPs). Q e scoreboard of external and internal indicators consists of ten measures with indicative thresholds. Half of them concern price competitiveness directly: –3-year backward moving average of the current account balance in percent of Gross Domestic Product (GDP), with a threshold of +6% and - 4%; –net international investment position in percent of GDP, with a threshold of -35%; –5-year percentage change of export market shares measured in values, with a threshold of -6%; –3-year percentage change in nominal unit labour cost, with thresholds of +9% for euro-area countries and +12% for non-euro-area countries, respectively;

37 Journal of International Studies Vol. 7, No.3, 2014

–3-year percentage change of the real e[ ective exchange rates based on Q e Harmonised Index of Con- sumer Prices/Consumer Price Index de^ ators, relative to 35 other industrial countries, with thresholds of -/+5% for euro-area countries and -/+11% for non-euro-area countries, respectively (European Com- mission, 2012, p. 28). Q e corrective arm, designed to enforce the implementation of remedies in case of harmful macroeco- nomic imbalances (if the EC considers that macroeconomic imbalances or the risk thereof exist, it will rec- ommend that the Member State(s) concerned adopt a corrective plan with a clear roadmap of implementing measures and a deadline; for euro area countries, the enforcement mechanisms will include both " nes and non-" nancial measures in case the imbalances are not corrected). Q is mechanism is the central part of the enhanced (non-" scal) macroeconomic country surveillance foreseen under “Europe 2020”. It is assumed that, together with " scal surveillance under the SGP, country surveillance aims at ensuring a stable macroeconomic environment conducive to growth and employment creation, taking into full account the interdependence of MS economies. Q e second strand ( Fig. 1.), thematic coordination, should be focused on growth-boosting reforms in the " eld of innovation and R&D, resource-e? ciency, business environment, employment, education and social inclusion (the elements of non-price competitiveness). Q e NRPs should set out Member States’ pro- posed trajectories for meeting their agreed national targets deriving from the " ve headline targets and should track progress towards these targets. Q e IGs provide the measures which MS could consider to attain their targets and to tackle bottlenecks. Where appropriate, the countries should indicate how EU structural funds will be used in support of achieving the targets as well as the budgetary impact of these measures. NRPs should clearly focus on a limited set of priority measures, based on the principle that reforms must be se- quenced. Progress will be monitored (in the cycle of ES) regarding " ve “Europe 2020” headline targets and the national targets which underpin them. In parallel, " scal surveillance under the Stability and Growth Pact as the third strand ( Fig. 1.) will be enhanced to strengthen " scal consolidation and foster sustainable public " nances. It is assumed that stronger coordination between various areas in an economy has a positive impact on achieving goals connected with competitiveness and at the same time positively impacting other areas of concern. Complimentary to the “Europe 2020” Strategy agenda and comprising of some additional reforms, the Euro+ Pact – has been agreed among euro area MS, as a re^ ection of their deeper interdependence, six non euro area countries have also chosen to sign up: , , , , Poland and Romania (the remaining States are free to sign up if they wish). Q e Pact is embedded in the described economic governance framework and the commitments taken therein are included in the NRPs of the countries con- cerned. Q e Pact, agreed upon in March 2011, focuses on competitiveness, employment, sustainability of public " nances and " nancial stability reinforcement. To foster price competitiveness, progress is assessed on the basis of wage and productivity developments and competitiveness adjustment needs. To assess whether wages are evolving in line with productivity, unit labour costs (ULC) are monitored over a period of time, by comparing them with developments in other Euro area countries and in the main comparable trading partners. For each country, ULCs are assessed for the economy as a whole and for each major sector (manu- facturing; services; as well as tradable and non-tradable sectors). In order to support non-price competitive- ness, measures to increase productivity are also proposed: further opening of sheltered sectors by measures taken at the national level to remove unjusti" ed restrictions on professional services and the retail sector, speci" c e[ orts to improve education systems and promote R&D, innovation and infrastructure, measures to improve the business environment, particularly for SMEs (European Council, 2011).

38 The bumpy road to a competitive economy – Magdalena Tusi Ñska economic governance in the European Union

Beyond the already functioning mechanisms, the topic of competitiveness in the context of the Euro- pean deepening integration process and in governance reinforcement is raised also in other documents and in plans as well. A solution to European challenges may be a true single market because it has the potential for rais- ing growth. According to Michel Barnier, Member of the European Commission responsible for Internal Market and Services, the internal market is the best protection in times of crisis. Q erefore the EU should implement the Single Market Act. A crucial aspect of the internal market is the services sector, which repre- sents three-quarters of the EU gross domestic product. Unfortunately, the deadline for transposition of the services directive has already passed. If implemented properly, this legislation should open up the services market to true cross-border competition, bringing e? ciency gains to a key sector of the European economy (M. Barnier, 2010). Another proposition is a Convergence and Competitiveness Instrument – CCI. Q at would be a mu- tually agreed contractual arrangement and solidarity mechanism available for euro area MS who are under stress and require national structural reforms for competitiveness and growth but whose lack of implementa- tion would have an adverse spill over e[ ect on other MS of the euro area. Q e contracts are to be concluded between the individual countries and the EU. Q eir content is to be based on the Country Speci" c Recommendations from the European Semester. Q e EC argues that, as it was mentioned in the article, the crisis has shown that the necessary reforms have often been implemented too slowly or not at all in the Mem- ber States, and this has had a negative e[ ect on other countries. Q e CCI now aims to take the European dimension into account in economic reforms and to enable the MS to implement the reforms more swiftly. Essentially, the reforms in question will increase competitiveness, largely by deregulating labour and product markets. Q e aim will also be to target public spending more competitively (European Commission, 2013).

OLD FAILURES AND THE NEW ECONOMIC GOVERNANCE One may say that the new economic governance characterised in the foregoing section seems compli- cated. For example, some of the mechanisms pertain to the whole EU, whereas some of them involve solely the eurozone. Furthermore, there is a risk of generating bureaucracy and the growing costs involved. Q e fact of modifying the national priorities every year and growing elasticity also leads to questioning of the idea of long-term strategies. Moreover, some liberal economists criticise the social character of the current Strategy and warn of neglecting competitiveness (Bieńkowski, 2010, pp.166-172; Jasiński, 2010). Considering such doubts, at the stage of research assessing the new governance, it is worth reminding ourselves of the fact, that the new rules did not appear out of nowhere, but are a response to the criticism of the foregoing governance. In order to specify clearly how the new economic governance deals with old problems, the crucial issues are presented in the table 2. Considering the arguments in table 2., it can be concluded that the EU acts according to the motto presented at the very beginning of the present article – there is an attempt to solve the existing problems by means of the new policy instruments, not with foregoing methods. It is expected that the new economic governance and the stronger policy coordination will support the competitiveness of the EU countries.

39 Journal of International Studies Vol. 7, No.3, 2014

Table 2 Post-Lisbon Strategy critical re^ ection and the new competitiveness governance

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40 The bumpy road to a competitive economy – Magdalena Tusi Ñska economic governance in the European Union

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It is di? cult to state expressly whether due to the enhancement of OMC, as well as the new method of coordination the priorities will be achieved by 2020. In any case, the two main obstacles can be identi" ed. Namely, the new programme seems to be overloaded, this may have a demotivating impact on the Member States, whereas the determination to be competitive at the national level is crucial. Furthermore, one of the postulates was to improve implementation mechanisms, but it seems that it has not been changed to a decent degree. Q e European Commission is allowed to apply pressure, but it concerns only Eurozone countries and their macroeconomic imbalances. When it comes to non-price competitiveness, the main way of reform mobilisations is still “peer pressure”. An exception is CCI, but this solution is just a plan. Q us, the second obstacle might still be the lack of adequate tools to force MS to ful" l their commitments included in NRPs what can have a negative impact on the competitiveness of the entire EU.

SUMMARY Q e Lisbon Strategy su[ ered from its lack of institutionalisation, because the OMC was built on the premise that the Member States could be trusted to evaluate themselves and motivate each other to achieve greater goals through coordination at MS level: in other words, they were left to their own devices, dooming the LS to failure. Consequently, the European countries were falling behind in the global competitiveness race and the Lisbon goals were not achieved. A good strategy should motivate all of those interested and included, which was impossible given the overambitious goal and “peer pressure” as a tool of control and motivation. Some modi" cations of the Agenda brought slight improvement, but the serious bump in the shape of the crisis on the way to the competitive economy proved, that the governance according to the renewed LS was not strong enough. Q e debate on the “Europe 2020” Strategy that has succeeded the Lisbon Agenda took place under the shadow of the economic crisis, which will continue to shape economic policies and developments in Europe

41 Journal of International Studies Vol. 7, No.3, 2014 for the next decade and even beyond. It was believed, that a new strategy is needed, but that it has to be bet- ter implemented and rigorously monitored. Taking on board the lessons of the crisis and the deterioration of the competitiveness of the EU, the implementation of the “Europe 2020” Strategy is based on a much stronger policy framework. Q rough reinforced monitoring and guidance mechanisms, the EU level pro- vides a supportive governance. As it was mentioned in the introduction, the EU’s countries are still su[ ering from the impact of the crisis and its consequences. Q us, topics like public " nances, deteriorating labour market or social exclusion have become an integral part of a debate about competitiveness. Having weathered a painful recession, it is tempting to look ahead with a sense of cautious optimism, though, bearing in mind the foregoing experiences with the LS and the weaknesses of the new economic governance, the road to the competitive economy will probably not be unperturbed.

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