A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Aiginger, Karl; Schratzenstaller, Margit Research Report New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition. Synthesis Report Part I WWWforEurope Deliverable, No. 11 Provided in Cooperation with: WWWforEurope - WelfareWealthWork, Wien Suggested Citation: Aiginger, Karl; Schratzenstaller, Margit (2016) : New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition. Synthesis Report Part I, WWWforEurope Deliverable, No. 11, WWWforEurope, Vienna This Version is available at: http://hdl.handle.net/10419/169308 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. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Contents Executive Summary1. Starting position2. Where to go 3. Guiding principles4. Drivers of change5. Facilitators of reforms6. Strategy for Europe7. Research gaps Refernces NEW DYNAMICS FOR EUROPE: REAPING THE BENEFITS OF SOCIO-ECOLOGICAL TRANSITION Karl Aiginger (Director WIFO, WWWforEurope Coordinator) Scientific Coordinator: Margit Schratzenstaller WELLBEING DYNAMICS INCLUSIVENESS SMARTER SUSTAINABILITY PUBLIC REFORMING DECOUPLING SECTOR FINANCE SKILLS AND ENERGY REFORMING SYMMETRIC dada WELFARE FLEXIBILITY Y NEW TEG DYNAMICS RA ST AD O REDIRECTING R - INNOVATION H G I H PART I: SYNTHESIS March 2016 FINAL VERSION1 Contents Executive Summary1. Starting position2. Where to go 3. Guiding principles4. Drivers of change5. Facilitators of reforms6. Strategy for Europe7. Research gaps Refernces AUTHOR: Karl Aiginger SCIENTIFIC COORDINATOR: Margit Schratzenstaller SCIENTIFIC ASSISTANCE: Teresa Bauer, Dagmar Guttmann, Vanessa Koch, Eva Sokoll, Teresa Weiss LEADING GENERAL CONTRIBUTIONS: Harald Badinger, David Bailey, Susanne Bärenthaler-Sieber, Michael Böheim, Stefan Ederer, Peter Huber, Jürgen Janger, Kurt Kratena, Thomas Leoni, Hans Pitlik, Janneke Plantenga, Andreas Sachs, Thomas Sauer, Margit PROJECT OFFICER: Domenico Rossetti di Valdalbero Schratzenstaller, Helene Schuberth, Jeroen van den STEERING COMMITTEE: Karl Aiginger, Harald Bergh Badinger, David Bailey, Susanne Bärenthaler- HIGH LEVEL ADVISERS: Kurt Bayer, Fritz Breuss, Alois Sieber, Michael Böheim, Stefan Ederer, Martina Guger, Heinz Handler, Geoffrey J.D. Hewings, Heinz Einsiedl, Peter Huber, Jürgen Janger, Kurt Kratena, Hollenstein, Stefan Schleicher, Gunther Tichy, Ewald Thomas Leoni, Anja Mertinkat, Hans Pitlik, Janneke Walterskirchen Plantenga, Andreas Sachs, Thomas Sauer, Marcus Scheiblecker, Margit Schratzenstaller, Kristin DISSEMINATION AND PROOFREADING: Ian Foster, Smeral, Johannes Steiner, Jeroen van den Bergh Astrid Nolte, Karin Rysavy, Johannes Steiner, Agnes Streissler-Führer PROJECT MANAGEMENT: Martina Einsiedl, Anja Mertinkat, Kristin Smeral, Anna Zschokke LAYOUT: Matthäus Zinner – typothese.at SCIENTIFIC BOARD: Philippe Aghion, Bruno Amable, Kenneth Joseph Arrow, Tony Atkinson, Enric Banda, Graciela Chichilnisky, Giacomo Corneo, Paul de Grauwe, Barry Eichengreen, Ernst Fehr, Jean-Paul Fitoussi, Dominique Foray, Anthony Giddens, Geoffrey J.D. Hewings, Magdalena Nowicka, André Sapir, Rick van der Ploeg, Mieke Verloo, Ernst Ulrich von Weizsäcker, Sylvia Walby, Richard Wilkinson, Salma Bava Ummu, Jeffrey Sachs POLICY BOARD: Gunilla Almgren, Giuliano Amato, Kurt Bayer, Markus Beyrer, Colin Crouch, Sheila Dow, Brigitte Ederer, Jørgen Elmeskov, Franz Fischler, Anselm Görres, Andrej Horvat, Gernot Hutschenreiter, Helga Nowotny, Konrad Pesendorfer, Slavo Radosevic, Claus J. Raidl, Juliet Schor, Bernadette Ségol, Gertrude Tumpel-Gugerell, Christian Kastrop CONTACT FOR INFORMATION This report can be downloaded from www.foreurope.eu Project Coordinator: Karl Aiginger Synthesis (http://Synthesis-Report-Part-I.foreurope.eu ) Scientific Coordinator: Margit Schratzenstaller Synthesis - Executive Summary (http://Synthesis-Summary.foreurope.eu) WIFO – Austrian Institute of Economic Research Model and Area Chapters (http://Synthesis-Report-Part-II.foreurope.eu) Arsenal, Objekt 20, 1030 Vienna THEME SSH.2011.1.2-1 [email protected] Socio-economic Sciences and Humanities Europe moving towards a new path of economic growth and social development - Collaborative project Please cite as follows: Aiginger, K., New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition. Part I: This project has received funding from the European Union’s Seventh Framework Programme for research, Synthesis, WWWforEurope Synthesis Report, Final Version, technological development and demonstration under Vienna, Brussels, 2016. grant agreement no. 290647. 2 Contents Executive Summary1. Starting position2. Where to go 3. Guiding principles4. Drivers of change5. Facilitators of reforms6. Strategy for Europe7. Research gaps Refernces CONTENTS Executive Summary ������������������������������������������������������������������������������������������������������������������������������������������������������������2 1. Europe 2016: starting position ��������������������������������������������������������������������������������������������������������������������������� 19 The successful European model is undergoing a critical period. Major external and internal challenges call for a profound and coherent long-term strategy. However, heterogeneity and imbalances across Member States, as well as misperceptions about policy goals, are hindering successful reforms, resulting in low dynamics, high unemployment and a loss of leadership in sustainability. Therefore, Europe needs a new common vision of its position in the globalised world. 1.1 Motivation of the project: Europe requires change . 19 1.2 The success story has been challenged from within and beyond . 20 1.3 “Business as usual” forecasts omit important problems ���������������������������������������������������������������������������������������������������������������������������������������������������������������������� 25 1.4 Calling established policy stances into question . 28 1.5 The further outline of the report . 32 2. Where Europe should be heading . 33 This project strives to develop such a vision, claiming wellbeing as the overarching benchmark of performance for Europe. It is rendered operational with three strategic goals: (i) economic dynamics, implying that more people profit from a broader set of economic achievements; (ii) social inclusiveness entailing lower unemployment and lower income spreads, as well as an absence of conflicts; and (iii) environmental sustainability, demanding respect for planetary limits and an absolute reduction of emissions and resource use. 2.1 A vision for Europe in 2050 . 33 2.2 Three goals providing wellbeing . 37 2.3 Monitoring wellbeing by indicators and “nowcasting” . 41 3. Three guiding principles . 43 Simultaneity between goals, the pursuit of high-road ambitions, and a two-stage implementation are the three guiding principles of a reform strategy. They imply respecting tradeoffs and creating synergies, going for a quality strategy based on innovation and skills and, finally, bringing consumption and investment in line with existing capacities so as to reduce inherited unemployment, debt and income inequality in a first stage and in a second stage enable higher wellbeing based on lower growth. 3.1 Simultaneity between goals ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 43 3.2 Going for the high road . 50 3.3 A two-stage strategy implementation . 54 3.4 Policy recommendations . 57 i Contents Executive Summary1. Starting position2. Where to go 3. Guiding principles4. Drivers of change5. Facilitators of reforms6. Strategy for Europe7. Research gaps Refernces 4. Drivers of change . 58 WWWforEurope identifies seven drivers of change that are essential to transition. These drivers are: redirecting innovation, increasing the dynamics by investing into change, welfare systems fostering social investment, a labour market improving skills and providing symmetric flexibility, a decoupling of labour and energy from economic output, a public sector halving labour taxes and, finally, a reformed financial sector aligned with wellbeing. 4.1 Boosting and redirecting innovations . 58 4.2 Increasing dynamics on the demand side . 66 4.3 Reforming welfare systems and fostering social investment . 72 4.4 Upgrading skills and symmetric flexibility . 80 4.5