A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Böheim, Michael (Ed.); Strauss, Anna (Ed.); Weiss, Teresa (Ed.) Research Report Moving towards a new growth model: Policy options WWWforEurope Deliverable, No. 10 Provided in Cooperation with: WWWforEurope - WelfareWealthWork, Wien Suggested Citation: Böheim, Michael (Ed.); Strauss, Anna (Ed.); Weiss, Teresa (Ed.) (2015) : Moving towards a new growth model: Policy options, WWWforEurope Deliverable, No. 10, WWWforEurope, Vienna This Version is available at: http://hdl.handle.net/10419/125627 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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Editors: Michael Böheim, Anna Strauss, Teresa Weiss (WIFO) Contributions by: Karl Aiginger (WIFO), Catherine Mann (OECD), Hans Pitlik (WIFO), Jeroen van den Bergh (UAB), David Bailey (Aston), Lisa de Propris (UoB), Jürgen Janger (WIFO), Harald Badinger (WU), Renaud Thillaye (Policy Network), Thomas Sauer (EAH Jena), Stephanie Barnebeck (EAH Jena), Yannick Kalff (EAH Jena) Contributing Stakeholders: Valeria Andreoni (Liverpool Hope), Miklós Antal (CEU), Christoph Breinschmid (ÖGfE), Henrik Brinkmann (Bertelsmann Stiftung), Hannah Brössler (ÖSSFO), Alfredo de Feo (EUI), Gerlinde Gutheil-Knopp-Kirchwald (TU Wien), Enrico Marelli (University of Brescia), Clemens Matzer (ÖSFO), Margit Noll (AIT), Jürgen Schneider (UBA), Klaus Schuch (ZSI), Katja Senger (WKO), Nicole Stanga (RBI), Charlotte Steenbergen (European Forum Alpbach), Susanna Ulinski (WU), Doris Weichselbaumer (JKU) Moving towards a new growth model D602.4: “Conference Report: Moving towards a new growth model – Policy options” Deliverable No. 10 This paper can be downloaded from www.foreurope.eu Please respect that this report was produced by the named authors within the WWWforEurope project and has to be cited accordingly THEME SSH.2011.1.2-1 Socio-economic Sciences and Humanities Europe moving towards a new path of economic growth and social development - Collaborative project This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement no. 290647. Contents Editorial 1 1. From individual policy lines towards a strategic European Approach 3 1.1 The need for a new strategy 3 1.2 The problems have to be jointly solved in a strategy 4 1.3 The starting situation in Europe 4 1.4 A vision for Europe 2050 5 1.5 WWWforEurope proposes a two-stage strategy 6 1.5.1 Stage 1: Consolidation and Reprogramming 7 1.5.2 Stage 2: Socio-ecological Transition 7 1.5.3 Reprogramming is all-important 7 1.6 Only a “high road” competitiveness is feasible for Europe 8 1.7 Strategy for Southern Europe 8 1.8 Towards new concepts of “competitiveness” and “Industrial Policy” 9 1.9 Conflicts will arise and a mechanism to deal with them is necessary 9 1.10 From social protection to social investment 10 1.11 Targeting technical progress: from labour productivity to energy and material productivity 11 1.12 Public sector is all-important to change 12 1.12.1 Currently Europe is taxing the wrong activities 12 1.12.2 Expenditure structure is not in line with European targets 12 1.13 References 14 2. Statements on the Second WWWforEurope Feedback Conference 15 3. Policy Coherence: New research, new understanding 36 3.1 Introducing the need for policy coherence 36 3.2 Europe: Is policy coherence needed? 37 3.2.1 European economic performance disappoints 37 3.2.2 Policy coherence may be lacking 38 3.3 New OECD research, and new understanding about policy coherence 39 3.3.1 Distributional consequences of structural reforms 41 3.3.2 Structural policy packages to promote robust and inclusive growth 42 3.4 Policy coherence from an environmental perspective 42 3.5 Conclusion on OECD research on policies and policy coherence 43 4. Chapter Area 1: Challenges for the European Welfare States 45 4.1 Introduction 45 4.2 Area 1 results in a nutshell 47 4.3 Synergies, trade-offs and reform implementation challenges 59 4.4 Some final remarks 66 4.5 References 67 5. Chapter Area 2: Analysing policies for a transition to a low-carbon economy 72 5.1 Introduction 72 5.2 Core notions and issues to be addressed 75 5.3 Empirical background studies 77 5.4 Four complementary policy models 81 5.4.1 DYNK general equilibrium modelling 82 5.4.2 The FALSTAFF macroeconomic model 84 5.4.3 Modelling Growth, Distribution, and the Environment in a Stock-Flow Consistent Framework 87 5.4.4 Testing innovation, employment and distributional impacts of climate policy packages in a macro-evolutionary systems setting 90 5.5 Further policy insights 90 5.6 Conclusions 97 5.7 References 98 6. Chapter Area 3: Drivers of Change – Innovation and Industrial Policies 103 6.1 Introduction: Europe’s challenges on innovation and industrial performance 103 6.2 Main findings of Area 3 in the perspective of developing a new growth and development strategy 105 6.2.1 What is the impact of Green Innovation on Growth, Employment and Social Cohesion? 105 6.2.2 How do we realign policy towards Social and Ecological Objectives? 107 6.2.3 How can entrepreneurial dynamics drive smart and sustainable growth? 111 6.2.4 How can intangible assets and the quality of academic research drive change? 112 6.2.5 A strategy for implementation: How can we redefine competitiveness so as to encompass social and ecological objectives, framing a new industrial policy needed for technology shifts and inclusive, sustainable growth? 116 6.3 Conclusions: From Trade-Offs to Synergies? 125 6.4 References 129 7. Chapter Area 4: Governance Structures and Institutions at the European Level 132 7.1 Introduction 132 7.2 The EMU crisis and its legacy 133 7.2.1 The emergence of the EMU-crisis 133 7.2.2 Rescue measures and new EMU economic governance 134 7.2.3 Further proposals on reforming EMU governance 138 7.3 Reforming EU economic governance: options and parameters 140 7.3.1 Europe 2020 and the European Semester 140 7.3.2 Improving coordination within the boundaries of existing treaties 143 7.3.3 Parameters for deepening European Economic Governance 147 7.3.4 Improving the legitimacy of European economic governance 148 7.4 The road ahead, conclusions 152 7.5 References 153 8. Chapter Area 5: The role of regions in the European Socio-ecological Transition 157 8.1 Introduction 157 8.2 Background to the different case studies 159 8.2.1 The governance of urban resource systems 159 8.2.2 Institutional aspects of regional labour market policy 161 8.2.3 Implementing integration policy on a regional level 162 8.2.4 The impact of agricultural policies 163 8.3 Empirical findings 164 8.3.1 Preconditions and limits for self-organisation 165 8.3.2 The role of national and EU level institutions 167 8.3.3 The benefits of local initiatives and cases for place based policies 169 8.3.4 Limits of place based policies and challenges to regional institutions 171 8.4 Summary and Policy Conclusions 172 8.4.1 Place-based policy approaches in local labour markets and integration policy 173 8.4.2 Development of self-organisation 174 8.5 References 176 Tables and Figures Table 1 Summary of results 89 Table 2 Policy challenges illustrated for a transition to sustainable energy 92 Table 3 Scores and output weights obtained with Model 4, for selected European economies 96 Table 4 Findings and recommended options 175 Figure 1 Total welfare state generosity index, by welfare regime group (period 1980-2010) 46 Figure 2 Government spending on social protection, health, education and Active Labour Market Policies (in percent of GDP), 2012 61 Figure 3 The SFC model framework 88 Figure 4 New perspectives outcomes: Income pillar 118 Figure 5 New perspectives outcomes: Social pillar 119 Figure 6 New perspectives outcomes: Ecological pillar 120 Figure 7 Towards a concept of competitiveness under new perspectives 122 Figure 8 New Industrial Policy 126 Figure 9 The “EMU-crisis” consisting of multiple crises in the Euro area 134 Figure 10 New Economic Governance of EMU since 2010 135 Figure 11 The structure of Europe 2020 objectives 141 1 Editorial The present report summarizes the main contents that were presented at the Second WWWforEurope Feedback Conference, taking place on May 6th 2015 in Vienna. After 38 months of extensive work on essential questions for Europe’s future with a particular focus on laying the analytical basis for a socio-ecological transition the conference marked the end of the second phase, the policy formulation phase, of the project, as well as the beginning of the third phase, the synthesis phase.