Competitiveness of the European Union: Pre-crisis Trends and Impact of the Financial Crisis

Abstract

This paper has the aim to point out the risks of reducing the EU competitiveness by analyzing the indicators of price and cost competitiveness, as well as the structural and technological aspects of competitiveness. The influence of the world crisis on the competitiveness and export performances of the EU is in the focus in order to show at what extent the global downturn may have aggravated previously existing needs for readjustment of the functioning of the Union. Not only that the crisis showed that the problems in the Union were not created recently, but also it demanded urgent needs of new improved policy in order to regain the competitiveness strength and performances. The reformulated strategy needs to be based on openness and innovation, with investment in research and development. Long-term expectations are to be made comprehensive structural changes in order to overcome structural differences between individual Member States and to increase the overall competitiveness. Additionally, trade barriers are needed between individual Member States to be removed and higher individual and aggregate rates of economic growth are to be achieved. It is clear that the effects of deep integration of the EU has not yet been achieved, and expected benefits may not be realized, if internal and external balance of the Union is not maintained.