The document provides an assessment of the Lisbon Strategy which aimed to make the EU the most competitive knowledge-based economy by 2010. It finds that while the goals of increasing growth and employment were appropriate, the strategy suffered from a lack of commitment, ownership and effective benchmarking and incentives among member states. It argues that advancing the goals will require strengthening the rationale around issues like the environment and social cohesion. It also calls for adjusting policy instruments to place more emphasis on education and financial markets to complement existing focuses on labor and product markets.

1. Lisbon: An Assessment Jean Pisani-Ferry Ljubljana, 28 September 2007

2. Outline Where we stand Lisbon assessment : The right diagnosis? Lisbon agenda : The right goals? Lisbon policies : The right medicines? Lisbon process : The right protocol? Conclusion

3. Where we stand 2000: Lisbon strategy for “ Employment, Economic reforms and Social Cohesion ” adopted Ambitious goals for 2010 End-of-boom, “new economy” context Much hype, weak commitment Gradual loss of credibility 2005: Lisbon re-launched with focus on “ Growth and Jobs ” Quasi-stagnation context Enlargement Disillusion and scathing assessment (Kok report) Refocus on growth and jobs Streamlined procedures 2008: End of three-years cycle 2010: Delivery assessment

4. Assessment : The right diagnosis? The 2000 assessment in context: a new mindset End of a macroeconomic adjustment cycle Realisation that Europe was losing ground vis-à-vis the US Employment, growth, knowledge economy Not substantially changed in 2005 Strong points Identification of key deficiencies in labour input, productivity Weak spots Enlargement China.. On/off Economic / social dimensions Environment

5. Agenda : The right goals? Is the focus on growth justified? Preferences Environmental sustainability A matter for the EU or for national governments? Interdependence Policy learning The euro dimension

6. Policies : The right medicines? Strong emphasis on: Labour market reforms Product market reforms at EU and national levels Less emphasis on: Financial markets ( why ?) Education ( why ?) Issues of policy complementarity (mic/mic, mic/mac) Diversity issue post-enlargement

7. Process : The right protocol? Variance in ownership Methodology Incentives Benchmarking Budget

8. Conclusions Value of Lisbon remains Larger, more diverse EU is a significant challenge Strengthen the rationale Room for adjustments in Goals (environment, social) Policy instruments (education, financial markets) Effectiveness would require More systematic benchmarking Incentives through budget

9. Thank You For Your Attention Jean Pisani-Ferry +32 2 227 4217, jean.pisani-ferry@bruegel.org Rue de la Charité 33, B-1210 Brussels www.bruegel.org

10. What accounts for the income gap

11. Capital allocation, post-entry growth

12. The education issue (1)

13. The education issue (2)

14. The diversity issue