THE RISE AND FALL OF EUROPE’S ECONOMIC GROWTH
Keywords:
Europe, economic growth, accumulation of production n factors, innovations, research & development, competition, barriers to entryAbstract
The success of Europe’s economic growth after the World War II till the mid-1970s is explained by its engine – accumulation of production factors, including reconstruction of devastated and development of new production capacities – being suitable to the lower level of economic development and recovery from war destruction. Form mid-1970s, nonetheless, with Europe approaching technological frontier, this engine of growth could not produce remarkable results, hence economic growth based on innovations should have been introduced. Institutions suitable for economic growth based on accumulation of production factors are not appropriate for innovation based growth. This is the main reason for the slowing down Europe’s growth. The most significant constraints to Europe’s economic growth based on innovations are: lack of competition, especially in the services, substantial legal barriers to entry, lack of financial intermediation suitable for funding new entries and its top universities that are lagging increasingly to their peers in the world. The fundamental precondition for removal of these obstacles is sorting out political pressures for status quo preservation created by the private interest of the privileged.
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