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Structural Change, Innovation and Growth in the Single EU Market

In: Innovation, Employment and Growth Policy Issues in the EU and the US

Author

Listed:
  • Paul J.J. Welfens

    (University of Wuppertal)

  • Dora Borbély

    (University of Wuppertal)

Abstract

In the 1990s US economic growth exceeded that of both the EU15 and Euro zone. It was only in 2006 that the EU growth – much influenced by Germany’s economic recovery – gained speed and in 2007/2008 output growth of the Euroarea and the EU27 is expected to exceed US growth. As the EU’s growth rate is rising relative to the US one may expect that the US current account deficit-GDP ratio will improve; one should, however, note that the EU’s surplus vis-à-vis the US is rather modest, the main surplus countries in a bilateral perspective are Japan and China. With China’s exchange rate more or less fixed to the dollar (and similar settings in Asian countries), the bilateral exchange rate movements in Asia will hardly help the US to strongly reduce the current account deficit in the medium term. To the extent that the high US current account deficit should continue for many more years to come one might have to cope with a sharp real depreciation of the dollar in the long run.

Suggested Citation

  • Paul J.J. Welfens & Dora Borbély, 2009. "Structural Change, Innovation and Growth in the Single EU Market," Springer Books, in: Paul J.J. Welfens & John T. Addison (ed.), Innovation, Employment and Growth Policy Issues in the EU and the US, chapter 0, pages 1-40, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-00631-9_1
    DOI: 10.1007/978-3-642-00631-9_1
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    Keywords

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    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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