Forschungs- & Entwicklungsinformationsdienst der Gemeinschaft - CORDIS

Technology, economic integration and social cohesion

This project aims to provide insight into the impact of two important and interrelated developments in the world economy on social cohesion and exclusion in the European Union.

These developments are:
- Technological change, and in particular the so-called called Information and Communication Technologies (ICTs); and

- Globalisation, broadly driven by technology and by the liberalisation and deregulation of trade and capital flows. Technology (ICTs) is seen as the single most important factor shaping employment and economic growth, while globalisation is seen as leading to qualitative changes in the form and effects of the exposure of countries to foreign competition.

Social cohesion is a broad issue with many different aspects. An important part of the concept of social cohesion relates to (un) employment and income differences. The project aims to focus mainly on these two issues when dealing with the issue of social cohesion. The level of analysis is the country and the regional level, both within the European Union. The project also aims to compare European Union performance to the global economic trends. The project uses a mix of methodologies from economics and business studies, including descriptive data analysis, economic model building, econometric analysis and policy analysis to analyse the impact of technological change and globalisation on social cohesion in the European Union.

There is an ongoing debate about the factual evidence surrounding globalisation. Most of the readily available evidence, presented in many OECD and European Union reports, focuses on trade and foreign direct investment (FDI) flows. This evidence tends to suggest that there has been little increase in globalisation defined in this way. Viewed in this narrow way, globalisation may indeed be considered a myth. However, such a view ignores at least two important aspects of current developments: the structure (i.e., sectoral and national shares) of the FDI and trade flows, and the vehicles (e.g., institutional change and technological change) for the increase of these flows. It will be argued here that with regard to both these aspects, crucial new developments are taking place, and that these have important implications for issues under research in this project.

The analysis shows that the changes associated with the shift towards a knowledge-dominated economy (such as pervasive ICTs, globalisation and the advent of new forms of activity), and the far-reaching restructuring that is going on, call for a concerted policy response. One of the main challenges facing policy is how to deal with the apparently adverse specialisation pattern of European industry documented in this project. A major policy issue here is the extent to which it is desirable to target the expansion of these areas, which offer good potential for growth, especially if they are ‘employment-friendly’. Past policy errors have resulted in such targeting falling out of favour. However, one of the threads running through this research is that a new technological paradigm based on ICTs is emerging, and in the light of this, it makes sense to look afresh at the case for explicit targeting.

Responding to ICT as a new techno-economic paradigm calls for a reassessment of the factors that influence capabilities in this area. The work in this project stresses the importance of transforming the education and training systems in order to equip individuals with the skills needed for an environment in which the major new technology is pervasive. The continuing skill shortages in software testify to the relative failure of Europe to meet this challenge, and it is evident that this deficiency has slowed the diffusion of ICTs beyond the immediate sectors that developed and applied them. The project also emphasises the importance of combining skills with diffusion-oriented policies centred on social needs, in order to stimulate learning processes. In this regard there is great scope for raising quality as the core competitive advantage. Both product and product innovation can assist in achieving this aim and it is clear that this should be another policy priority.

The project discusses number implications for different policy areas at the European level. With regard to macroeconomic policy, it is suggested that the EU economy is now well placed to adopt a more expansionary economic policy. The key point, however, is that a policy framework in which decisions affecting the demand-side are taken without considering the supply-side will be less effective.

With regard to the regulatory system, it is argued that especially in the emerging areas of ICTs and biotechnology, the early adoption of appropriate standards and the manner in which regulations are framed can have a crucial impact on the pace at which the industries develop. It is our contention that Europe needs to adopt a wider and more inclusive definition of science and technology policy than in the past. EU sponsored Framework Programmes have played a useful part in financing and encouraging specific scientific research. Little effort has, however, gone into promoting capability amongst ‘users’ of ICTs and in providing a social and institutional setting that encourages their implementation.

In the field of territorial policy, new plans will have to be devised very soon for the next Structural Funds ‘programming period’, running from 2000 to 2006. The project argues that much greater weight should be accorded in these plans to equipping the lagging regions to compete in the knowledge-driven economy. It is clear that there are only limited opportunities to foster activity in some of the leading ‘knowledge’ sectors. At best, the EU can sustain only a handful of Silicon Valley equivalents, and there is little point in pretending otherwise. Instead, the challenge for policy-makers involved in territorial policies is to identify niches (processes, stages of production, products or services) where the region or locality can plausibly compete.

With regard to labour market policies, the project suggests to follow a twin strategy of targeting those occupations or professions which support competitive advantage (e.g., in the advanced service industries identified as central to economic growth) in order to boost economic growth, while having a separate strategy for job creation aimed at cutting unemployment. It is hard to avoid the conclusion that the bulk of new jobs must come from expansion of personal services in areas such as care.

It is evident from the project that in responding to the challenges of the knowledge economy, many policy areas are asked to give directly or indirectly a significant contribution. Therefore, there is a need for more intra-European policy co-ordination both between different sector policies and across different territorial areas. In other words, important policy issues arise in determining the level at which policy should be implemented so as to be most effective.


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