Hidden Treasures. Mapping Europe’s sources of competitive advantage in doing business. CEPS Paperback 2019

Klaff, Donald and Renda, Andrea (2019) Hidden Treasures. Mapping Europe’s sources of competitive advantage in doing business. CEPS Paperback 2019. Series > Centre for European Policy Studies (Brussels) > CEPS Paperbacks . UNSPECIFIED.

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Abstract

Europe is often presented as a declining global power, in which red tape, incumbency interests and governance flaws hamper economic performance, innovation and productivity. Part of this can be traced back to the inherent challenge and ambition of the European integration project; but also to external factors, including the rise of the United States as a global superpower during the 20th century, and the worldwide diffusion of ideas, especially in politics and economics, that had seldom originated in Europe, or that were tailored to its particular legal, economic and social traditions. Until recently, Europe has sought to carve out its model and role in global governance by mimicking many US policy approaches: shareholder capitalism, deregulation and unconstrained movement of capital. As the global community increasingly sees the rise of protectionist stances, and a growing inability to face emerging challenges such as sustainable development and the breath-taking rise of disruptive digital technologies, Europe should seek to burnish its best qualities to reclaim its position in the global order, to the benefit of all. The prospect of Brexit, while certainly not favourable for the Union, paradoxically opens up new opportunities to face emerging challenges with a greater degree of cohesion. This book, a joint effort between Donald Kalff and Andrea Renda and benefiting from the contribution of CEPS researchers and a number of very helpful discussants, aims at identifying and exploring Europe’s ‘hidden treasures’, competitive advantages often covered by dust that could, if adequately nurtured, bring the ‘Old Continent’ back to the forefront of the global order. In our approach, a hidden treasure must meet specific characteristics: in particular, it should be a feature of the economy, legal system or legal tradition of the EU or a subset of its member states, which was (or is) receiving insufficient attention in public policy, and which has the potential to increase Europe’s competitiveness and overall positioning in the global context. Uncovering and promoting hidden treasures is a timely and much-needed exercise, as the EU approaches its post-elections transition and the global governance context appears to be changing rapidly, shaping a new playing field in which Europe has no obvious allies, and is increasingly challenged by superpowers with different, if not diverging, priorities. Our findings show that Europe’s unique balance between freedom, justice and fairness provides a solid basis for identifying hidden treasures. For example, we consider that the conspicuous advantages offered by continental European contract law, starting with the good faith requirement in in contract formation, have not been sufficiently capitalised on, which may have contributed to the overall belief that the EU legal system is inherently less efficient than the US one. The main obstacles that can be identified are the inefficiency of the judiciary in many countries, the cost of access to justice for smaller firms and citizens, and the lack of a robust set of rules protecting the interests of smaller contractors in relational contracts. This is why we believe that the EU should consider taking action to promote the use of civil law, improve the effectiveness and efficiency of legal institutions, and remove the remaining obstacles to trade in the single market.

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