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Weak Investment in the EU: A Long-Term Cross-Sectoral Phenomenon

Author

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  • Martin Gornig
  • Alexander Schiersch

Abstract

Based on capital stock, in total, over six trillion euros less was invested in the European Union between 1999 and 2007 than in the non-European OECD countries, including the US, Canada, and Japan. In the euro area, investment was more than 7.5 trillion euros less than in non-European OECD countries. In virtually all EU member states, gross fixed assets (capital stock) are older than the OECD average and also demonstrate slower growth. This is particularly true for industry, which is expected to play a key role in Europe’s recovery. In order to achieve a higher growth rate, Europe must tackle this lack of investment across the board. Just implement investment programs in individual countries, such as the southern European crisis countries is not enough. In order to launch a broad investment offensive across the EU as a whole, specific steps must be taken. With a view to tackling the lack of investment in the long term, measures include an efficient competition policy and investmentfriendly tax policy.

Suggested Citation

  • Martin Gornig & Alexander Schiersch, 2014. "Weak Investment in the EU: A Long-Term Cross-Sectoral Phenomenon," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 4(7), pages 23-30.
  • Handle: RePEc:diw:diwdeb:2014-7-5
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.469266.de/diw_econ_bull_2014-07-5.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ioanna C. Bardakas, 2016. "Structural and cyclical factors of Greece’s current account balances: a note," Working Papers 206, Bank of Greece.
    2. Nicos Christodoulakis & Christos Axioglou, 2016. "Underinvestment and unemployment: the double hazard in the euro area," Working Papers 205, Bank of Greece.

    More about this item

    Keywords

    investment; capital stock; sectors;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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