“Le Monde” published on February 24, Natixis economist Patrick Artus’s article, mainly focusing on the existence of three major structural deficiencies in the euro area:
The first is the scarcity of raw material resources. This leads to a huge European energy trade deficit, thus weakening Europe’s competitiveness. In particular, the price of energy in Europe (about 30 euros per megawatt hour) is almost four times higher than in the United States, leading European companies to relocate to the United States.
Second, education and vocational training systems are underperforming. The latest OECD survey on the Program for International Student Assessment (PISA, 2022) shows that Japan, South Korea, and the United Kingdom all outperformed the eurozone’s score. So do the scores of the Program for International Assessment of Adult Competencies (PIAAC).
Third, investment in new technologies and R&D expenditures are weak. 2022 investment in new technologies and R&D expenditures as a percentage of GDP are both higher in the US than in the euro area, which leads to slightly lower productivity growth in the euro area than in the US, and to manufacturing productivity growth that is significantly outpaced by the US.
The article argues that the above triple defects, coupled with the aging population facing Europe, are the deep-seated reasons for the eurozone’s low GDP and labor productivity growth. In order to break the above situation, the eurozone should be the current account surplus more for increasing innovation and research and development expenditures, in order to improve their own productivity.