Hitting Lisbon targets could result in 25 per cent GDP increase by 2025, experts say
Achieving the ambitious competitiveness targets set by EU leaders at the Lisbon Council in 2000 could lead to a GDP increase in Europe of almost a quarter by 2025, claims a new report produced for the Commission's Enterprise and Industry DG. The study carried out by the Netherlands Bureau for Economic Policy Analysis (CPB) sought to measure the impact on employment and growth of achieving five of the most important Lisbon goals: the three per cent research and development (R&D) spending target, the 70 per cent employment target, the reduction of administrative burdens, the internal market for services, and improving human capital. Given the uncertainty involved in predicting the precise economic effects of these policy measures, the study provides lower and upper end impact scenarios. Thus, it concludes that: 'If Europe would really reach the goals [its leaders] set, Europe's GDP could increase by 12 per cent to 23 per cent and employment by about 11 per cent.' The area of the Lisbon strategy that offers the most potential for GDP gains is the three per cent R&D spending target, according to the report. If the EU is able to hit the target in 2010 and sustain it until 2020, the direct consequence and 'associated knowledge spillovers' of this will amount to a 3.5 to 11.6 increase in GDP by 2025 under the two different scenarios. In the upper end scenario, the report adds, the potential GDP gains would be highest (up to 30 per cent) for those countries that currently spend the least on R&D, while those countries that have already hit the target would see only minor gains of around 3 per cent. As well as affecting countries to a varying degree, the positive impact of hitting the three per cent target would also be felt differently across industrial sectors. The more R&D-intensive high technology sectors stand to benefit the most, as well as the R&D sector itself, according to the CPB report. However, the authors stress that their analysis did not include assessing the probability of reaching the three per cent target, which would require an increase in R&D investment of some 50 per cent by 2010. 'At least for three reasons that will not be easy: to perform R&D firms need money, R&D scientists and good ideas,' says the report. Indeed, achieving any of the five main goals analysed in the report will require significant policy efforts in most countries, the total cost of which could not be entirely integrated into the figures, admit the authors. Nevertheless, they are confident that hitting the Lisbon targets would roughly translate to a 12 to 23 per cent rise in GDP and an increase in employment of 10.3 to 11.9 per cent. 'These benefits reveal the potential that the Lisbon strategy has to stimulate growth and create new jobs. But it also shows how ambitious the goals the EU has set itself are,' concludes the report. Reacting to the document in a statement, the Commission said: 'The lesson to be drawn here is that resolute commitments from the Member States to implement the reforms necessary to reach the Lisbon goals will in the end determine whether or not Lisbon will deliver the growth and jobs that citizens have been promised since 2000.'