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Présentation de Sophie Vermeille à Harvard law school

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Présentation sur le lien entre qualité des institutions et la capacité d'un pays à innover et donc à poursuivre sa croissance
25 octobre 2017

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Présentation de Sophie Vermeille à Harvard law school

  1. 1. European Institutions, Innovation and Growth Sophie Vermeille Founder and President, Droit & Croissance / Rules for Growth Researcher in Law at the University of Paris (Panthéon - Assas) Corporate & Restructuring Lawyer Harvard Law School October 25, 2017
  2. 2. Introduction: • Nobel Prize winning economist Douglass North: " institutions " are the set of laws, written rules and informal constraints, as well as the instruments to enforce the application and to sanction the violation of such laws, rules and constraints. • Inability of the institutions of most of the Member States in Europe to adapt and address the changing needs of an innovation-based economy – no clear mandate given to the European institutions to fully take the lead. 2
  3. 3. • The law can have a significant impact, not only on the ability and incentives of firms or entrepreneurs to innovate, but also on the protection of rent seekers profiting from past innovations and on the rate of diffusion of innovations in an economy. • Example: data protection regulations in Europe versus the US. Introduction: 3
  4. 4. Introduction: • It is not a battle between civil law jurisdictions versus common law jurisdictions. • Members States in Western Europe, especially France, Spain, Italy and Germany have repeatedly missed the opportunity to embrace the paradigmatic changes in legal reasoning that have accompanied the intellectual movement of legal realism. • Lack of multidisciplinary research has tremendous consequences. • In Eastern Europe, property rights are not sufficiently respected, judicial system poses even greater issues. 4
  5. 5. • Many Member States in Europe have reached a technological frontier which they are unable to cross at this moment in time. • It is urgent for these countries to promote the emergence of radical innovations on their territory and to enable their economic agents to transform the opportunities and the value that is created by such radical innovations. First observation: 5
  6. 6. • Joseph Schumpeter: “ the dynamism of an economy is based primarily on its dynamism in terms of innovation. ” • Companies as being in a perpetual competition for the domination of their markets. In a free market, this domination imposes itself to companies which must regularly face the risk of competitors innovating and capturing new market shares, irrespective of the fact whether such competitors are existing players or new entrants on a given market. • New challenges posed by artificial intelligence. 6
  7. 7. • Having reached the threshold of the technological frontier, Europe needs to change its institutions in order to enter into a new phase of economic development that is more conducive to radical and repeated innovations, and that will allow an innovation-based economy to flourish. Second observation: 7
  8. 8. • Economic progress is the consequence of the fact that people specialize, as much in terms of knowledge, as in the application that they chose to make of this knowledge. • For this reason, the number of exchanges between parties has significantly increased > they no longer hesitate to contract outside of their close business circles. • This increases the importance of the State to ensure that contracts are respected or, where applicable, that laws and regulations are enforced, while the importance of other modes of social organization, such as the family, decreases. 8
  9. 9. • The heightened judicial control of increasingly specialized economic interactions also requires a specialization of judges whose mission is to adjudicate the increasingly complex economic issues raised by these specialized economic interactions. • Whereas the European Union has achieved great projects: for instance the Banking Union, and tomorrow the Capital Market Union. • There are lots of difficulties arising from the absence of clear mandate of the European institutions: for instance no ability to modernize judicial court systems which is a critical issue. 9
  10. 10. • In an innovation-based economy, institutions must not limit themselves to encouraging the accumulation of capital, they must also play the role of a facilitator for the economy. • Growth economists have coined the term “appropriate institutions” to describe the idea that institutions will meet different objectives depending on whether a country is still in a phase of catch-up growth, has crossed the technological frontier or has reached a phase of radical innovations. Third observation: 10
  11. 11. • Certain institutions which may at a certain point in time be critical to growth, namely public utility infrastructure enjoying a monopoly, may, subsequently, become a barrier to growth and ultimately the crossing of the technological frontier. • Respect for property rights is the essential precondition for investment in physical and human capital, which ultimately encourages the adoption of more efficient technologies. • However, Member States in Europe must go beyond and find a way to reduce transaction costs: ex. bankruptcy law is the hot topic at the moment in the EU. • However, significant differences between Eastern Europe and Western Europe. 11
  12. 12. • By refusing to embrace the paradigmatic changes introduced in legal reasoning by legal realism, the discipline of law in Continental Europe has remained relatively self centered and is less well armed today compared to other countries in order to serve the European economy as a true facilitator. • Significant differences between the US and Europe in the area of legal research. Fourth observation: 12
  13. 13. • The difficulty of the laws in France, Italy, Spain and even in Germany to be a facilitator for their economy is not so much due to their civil law tradition. • Inability of the various legal systems to adapt to the current state of development of their economy as a whole. • Legal scholars failed to embrace the paradigmatic changes that have accompanied the movement of “legal realism” > no major Law & Economics movement in Continental Europe. • Unintended consequences of the Brexit for the legal research in Europe, influence of Oxford, Cambridge and the LSE at the EU level. 13
  14. 14. • The consequences of these missed opportunities for the laws of various State Members are numerous. • They have led to a greater complexity of their legal system making it more difficult, from a technical point of view, to introduce fundamental reforms while making it easier for rent seekers to oppose changes to the status quo. Fifth observation: 14
  15. 15. • Modernize the training of the bureaucrats, legal scholars and lawyers in general. • Encourage an interdisciplinary approach to legal studies in law schools and create incentives for interdisciplinary research in order to overcome the tendency of law schools to isolate themselves from other university departments and consequently academic disciplines. Recommendations: 15
  16. 16. • Increase the quality of the economic analysis that is included in the impact studies that have to accompany new legislative proposals. • Make use of techniques derived from cognitive sciences. Recommendations: 16
  17. 17. 17 Contact Sophie VERMEILLE Founder and president Droit & Croissance Rules for Growth + 33 (0) 6 73 04 89 90 svermeille@droitetcroissance.fr www.droitetcroissance.fr http://fr.linkedin.com/in/sophievermeille

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