Global trends and the economic crisis: Future alternative European growth strategies

In front of fiercer competition from outside (especially from emerging countries), of the contraction of the internal demand, following the crisis and the problems with public finances, and of the process of European integration that fostered increases in wages and inflation in its Eastern countries, Europe can no longer prosper without a clear long-run development strategy as it used to do before 2007. This paper aims at describing the long-run outcomes emerging from possible alternative growth strategies, differentiated between CEECs and EU15 countries, that had historically grown on the basis of two different development strategies. The analysis involves the development of scenarios over a time span of 18 years, from 2012, the latest year with actual data, up to 2030. Results show that the effects of Eastern countries' development strategies are highly influenced by the strategies chosen by the Western ones, while the opposite does not hold. Moreover, a scenario in which both groups of countries increase the quality of their original strategies, but remain in their actual productive specialization trajectories, is the least expansionary. In all cases, a strategy of modernization of CEECs economies leads to a more expansionary scenario; this strategy pays the most for Eastern countries if Western countries also move towards an industrial strategy. Finally, the most expansionary scenario is one of an advanced industrial Europe, and interestingly enough, this is also associated to lower increases in regional disparities.