Wednesday, January 30, 2013

Europe vs. the US - how sclerotic is Europe?

The ongoing narrative, supported by the global English-speaking media, is that there is something fundamentally wrong with Europe, which is "not competitive, can't create jobs and can't grow". It compares the sclerotic, lazy and quickly aging old continent the with the young, dynamic and attractive USA (with all these supposedly great facebooks etc). Sounds familiar?

Except that it is not true.

I have just looked at the official IMF numbers from the World Economic Outlook and compared Europe's GDP per capita growth (PPP), both for the euro zone and EU-27, with the US.

The conclusion: since 1993, the economic performance of EU-27 was better than in the US. The euro zone's level of GDP per capita (data available only from 1993, so I am not manipulating with time periods here) in 2011 was only 5% lower than in the US relative to the starting level in 1993, but at exactly the same level relative to 2000! Sweden has grown much faster than the US in the whole period (and of course Poland was better than all of them).

So, how sclerotic is Europe?

Figure: GDP (PPP) per capita, 2011/1993 (1993=1) and 2011/2000 (2000=1)

Sweden      2,17    Sweden      1,52   
EU-27      1,96    Germany      1,46   
USA      1,89    EU-27      1,45   
Germany      1,87    USA      1,37   
Euro area      1,83    Euro area      1,37   
France      1,77    France      1,35   

Source: IMF World Economic Outlook

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