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Московский экономический журнал 1/2020

DOI 10.24411/2413-046Х-2020-10005

STRATEGY EUROPE 2020 TOWARDS SUSTAINABLE INCLUSIVE INNOVATIVE ECONOMIC DEVELOPMENT

СТРАТЕГИЯ
ЕВРОПА 2020 НА ПУТИ К УСТОЙЧИВОМУ ИНКЛЮЗИВНОМУ ИННОВАЦИОННОМУ ЭКОНОМИЧЕСКОМУ
РАЗВИТИЮ

Issa Nauma, PhD student of the Department of International Economic, Plekhanov Russian University of Economic Moscow, Russian Federation 115093, Stremyanny Lane, 36, Moscow, Russia; E-mail: nouma.issa@yahoo.com

Исса Ноума, Аспирантка кафедры мировой экономики, Российский
экономический университет им. Г. В. Плеханова, РФ, г. Москва

Summary.
This article is devoted to explore the steps to achieve sustainable European
future by implementing the strategy Europe 2020 which is based on Lisbon Treaty.
the ten year ambitious plan aims for a structural adjustment in which economic
growth, social cohesion and environmental protection go in close association
and are mutually reinforcing. The 
analysis focuses on five main areas: R&D expenditure, gas emissions
and renewable energy, employment rate, primary and tertiary education, and risk
of poverty. the analysis leads to the conclusion that, even though the strategy
2020 is not delivering its goals in two main areas: risk of poverty with a gap
of 20.7 million people from the target set and spending on R&D with 0.97
percentage points below its target for 2020, however, the rest of strategy
objectives was reached

Аннотация. Данная
статья посвящена исследованию шагов по достижению устойчивого европейского будущего
путем реализации стратегии Европа 2020, основанной на Лиссабонском соглашении. Десятилетний
амбициозный план направлен на структурную перестройку, в рамках которой
экономический рост, социальная сплоченность и охрана окружающей среды тесно
взаимосвязаны и взаимно усиливают друг друга. Анализ сосредоточен на пяти
основных областях: расходы на НИОКР, выбросы газа и возобновляемые источники
энергии,уровень занятости, начальное и высшее образование и риск бедности. Проведенный
анализ позволяет сделать вывод о том, что, несмотря на то, что Стратегия 2020
не обеспечивает достижение своих целей в двух основных областях: риск бедности
с отставанием от установленного целевого показателя на 20,7 млн человек и
расходы на НИОКР на 0,97 процентных пункта ниже целевого показателя на 2020
год, однако остальные цели стратегии были достигнуты

Keywords:
Lisbon, financial crisis, Europe 2020, development, smart sustainable and
inclusive growth,  renewable energy.

Ключевые
слова:
Лиссабон, финансовый кризис,
Европа 2020, развитие, умный устойчивый и инклюзивный рост, возобновляемые
источники энергии.

The worldwide financial
crisis in 2009 was described as the most cruel crisis since the great
depression of the 1930s [13]. It started as a mortgage crisis in the USA and
propagated internationally leading into a collapse in the global banking system
which was followed by an international economic downturn and the great
recession [15]. the global economy including the developed countries struggled
to handle out the outcomes of the crisis which blot out years of growth
progress socially and economically, reveled the structural weaknesses in the
largest advanced economies, left the whole world facing meager challenges and stating
the need of  transformation towards more
stable future[3]. The Europe Union which is considered the second largest reserved
and second most traded currency after the USA, with estimated net wealth equal
to 25% of the 317 trillion$ global wealth[8], was as a whole vulnerable to the
crisis for many fundamental reasons like the culture fragmentation, clumsy
policy making, and low fertility rate, in addition to the meager challenges
like globalization, climate change, and ageing population which left the EU in
argent need for a turning point not only to recover from the crisis, but also
to come out stronger. The EU reflection on the financial crisis was by creating
a strategy leading into a smart, sustainable and inclusive economy providing high
levels of productivity, social coherence, and green growth [2].

Europe 2020 was created and developed based on the Lisbon agenda which was a new European perspective in the time of the transitions from nationals currencies into euro and the preparations of the EU enlargement. It was a development plan from 2000-2010 for the EU economy, launched at the European council meeting in Lisbon March 2000 and aimed to deal with the low productivity and the slackness growth in EU. The goal was to create the most competitive and knowledge based economy in the world based on three key roles: innovations, R&D, and environmental renewal [4]. Lisbon strategy was shaped as a 10 years reform program with annual monitoring reports on progress to find a resolution for the raising of economical challenges such as the domination of the USA and Japan in the sphere of information and communication technologies. At first the strategy was based on two diminution, concentrating on integration of new polices socially and economically to be implemented by the state members, but after one year another pillar has been added: the environmental diminution. In 2005 a mid-term evaluation for the five year period was lunched and the outcomes was not as expected, the strategy was falling behind its goals(i.e. 70% employment rate, and 3% of GDP spent on R&D) which suggested the need of changes in some policies. Lisbon strategy was mainly a learning experience, kept gradually developing throughout the whole period to a complex structure with multiply goals , and faced  many obstacles such as the growing process of the union at that time (i.e. from 15 state member to 27 since 2000; the euro-area expanded from 12 to 16 member); the fact that many of the policy areas involved Member State competences made the implementation of the strategy more complicated, and hinted that in order to achieve results, close cooperation between the EU and Member States would be required[14]. In 2006 a renewed approach for the agenda was lunched and set for three years cycle as a short term plan to guarantee more effective actions. The main priorities were to invest more on R&D and innovations, focus on labor market and business opportunities, climate change, energy policy, and to establish an effective partnership between the EU institutions and its member states. The recovery plan was promoted by incorporated a set of 24 guidelines for growth and jobs, economic policy guidelines (for macro-economic and micro-economic policy) and the employment guidelines (for the employment policy) which companied the general framework and previous polices within the renewed ones. In 2008 the EU council started the third period cycle of the strategy from 2008-2010 which included a minor adjustments of the 24 guidelines and global crisis management.

Lisbon strategy aimed
mainly to modernize the EU social model, invest in human capital, integrate an economical
and social policies, reduce the technology gap between USA, Japan and the EU and
to pave the way into transition to a knowledge-based economy and society by
implementing more efficient policies and creating more competitive and
innovative economy throughout completing the internal market[9]. It was divided
into three stages: the lunch of the first period between 2000-2004, mid-term
evaluation, the reform strategy 2005-2008, and the third cycle from 2008-2010. An
overall assessment of the strategy indicated that although the strategy did not
delivered all its promising goals, nevertheless it had dramatic influence on
the EU policy making by providing flexibility and dynamic adaptation to the
emerging political challenges over time and smoothly absorbing new Member
States as the Union expanded its membership. According to statistics indicators
the EU employment rate reached 66% in 2008 from 62% in 2000, the total R&D
expenditure as a percentage of GDP only grown from 1.82% in 2000 to 2% in 2008,
the official targets were 70% & 3% respectfully. Reforming the strategy
after the first five years was huge factor in boosting the growth rate which was
slow and almost near stagnation, the implementations of the renewed policies
helped raising the euro zone  GDP
potential growth to 0.2% between 2005-2007, also a robust growth in employments
rate was deducted reaching 64.6%[5]. These good results indicated the
possibility of reaching the strategy aimed goals at the end of the time period
epically that some of the member states was performing really well and had
reached and beyond the set goals at the end of 2007; however, in 2008 the
financial crisis hit hard and uproot most of these impressive results. Lisbon
strategy during its process had to overcome a lot of core issues, one of the
EU’s main challenges was not only narrowing the developmental gap with the
overseas, but also reducing the gap between the old and new members. On the
other hand, each member state was still building their ownnational
innovation strategies and define their owntargets instead of
gathering to produce a joint action, also the different conceptions and
mechanisms of the welfare for the Member States made it difficult to agree on
common direction in the social diminution of the strategy. Moreover it was
determined that one of the most structural problems in the strategy was the
lack of sufficient regulation, the weak and ineffective governance mechanisms
represented by the Open Method of Coordination OMC which is a soft mode of
governance over a centralized supranational method that allowed Member States
to maintain their own structural arrangements and thus there were no
institutional leadership to monitor progress and stimulate engagement[6]. To
sum up, one can argue that even though Lisbon Treaty was not a huge success
because of the unsatisfactory growth, the still productivity and
competitiveness gap with US, the imbalance between economic efficiency and social
equality, unmeet employment targets; however, on the other hand, with
justification it cannot be denied that it was a success in its essence as a
long term encouraging policy learning, planning, analyzing, coordinating, and
also as a beneficial instrument in evolving economic reform and for that reason
EU members were inspired to continue the Lisbon-type reforms within the newly
adopted Europe 2020 strategy.

After a difficult start to the decade under the obscurity of the financial and economic crisis, Europe was ready to pursue and redress its development plans. On March 2010 the proposal of strategy Europe 2020 was introduced and discussed by the commission of European Council, and in June 2010 it was adopted. Coping with Lisbon flaws was one of the main priorities in constricting the framework of Europe 2020, the lack of coherence, well defined guidelines, governance, monitoring performance, sanctions, obligations, national policies changes, clear procedures and time management were all taking into considerations, it was determined to increase the strengths and decrease the weaknesses over the last decade along with building up the missing harmony. Strategy 2020 main aspiration was attempting to deliver high levels of productivity, employment, and social cohesion within the Member States, while making less impact on the natural environment, and dealing with the ongoing challenges of globalization, climate change, aging population, and the financial crisis. Thus the strategy primary anchor was to attain smart, sustainable, and inclusive growth in five thematic areas [16].

In addition to the quantitative evolvement of the old strategy by increasing objectives areas from two to five towards expansion interest in reducing poverty, climate change , and education, the EU commission also supported its five goals with embracing seven flagships initiative on: innovation union, youth, digital agenda for Europe, resource effectiveness, industrial policy for the globalization era, a protocol for a new skills and jobs, and the fight against poverty.

Coordinating the effort
of EU member states was a crucial element in the success of the Europe 2020
strategy. To ensure this, The EU targets were interpreted into national level
to reflect each member’s current situation and the level of aspirant they are
able to reach as a portion of the EU whole effort to deliver Europe 2020. Moreover,
the European Commission has also set up the European semester, an annual cycle
of economic policy coordination that aimed mainly to foster structural reform,
insure growth stability, and to prohibit excessive macroeconomic imbalances in
the EU. The cycle included an annual growth survey, mechanism reports,
publication of country reports, fact finding mission for the member states and
submission of the national reform programs, and council discussions on country
specific recommendations.

The European Commission
carried out a number of evaluation reports on the EU cohesion policy which
until 2010 concentrated on improving economic, social and environmental conditions
within the European Union. The evaluations concluded that it would be more
effective to focus on a few key priorities such as resources especially in the
more developed regions because it will allows not only the member states but
also the EU regions to build up a tangible impact through starting programs
that identify a fixed number of policy preferences with a clear comprehension to
how they will be achieved and how their achievement would contribute to the
economic, social and territorial development of the EU regions and Member
States[1]. At this point the importance of the Smart Specialization Strategies
(S3) principle got more recognized by the European Commission because it aims
to boost growth and jobs in Europe, by enabling each region to identify and
develop its own competitive advantages and to manage a priority-setting process
in line with national and regional innovation strategies[13]. The S3 principle
represents a productive example of interaction between science and policy and
was initially developed by the Expert Group ‘Knowledge for Growth’ in 2008
based on the innovation system research and theory applied at the level of
regional systems of innovation (RIS) to enhance and
incorporated regional economic transformation as a key principle of investment
in research and innovation in the overall framework of strategy Europe 2020.
The first progress into this direction was publishing the
“Guide on Research and Innovation Strategies for Smart Specialization” In May
2012 which contains basic terms and principles to be followed in designing the
smart specialization strategies. The next milestone was to work on the
Implementing of the S3 principle taking into considerations the necessity of
being pragmatic about it, namely building on policy-makers’ needs and on
field evidence; being useful, meaning to create a relevant supporting tool; And
being executive, by providing practical suggestions that can be immediately
applicable. The implementation of research and innovation strategies was
considered as an important step and key driver for the achievement of Europe
2020 strategy objectives by the EU policymakers from a regional perspective [7].

Since 2010, a fundamental
progress and conclusive growth has been made in many areas including climate
change through the increase in the use of renewable energy sources and the reduction
in greenhouse gas emissions, as well as in the sphere of education where the EU
is within reaching distance of their headline targets, but on the other hand the
progress is less promising in developments of R&D investment and poverty reduction.
The analysis in 2018 edition of ‘Smarter, greener, more inclusive?’ showed that
the EU’s employment goal can still be reached if the growth recorded over the
past few years continues. The highest employment rate since 2002 was recorded
in 2017 at 72.2% up from 71.1% in 2016 and in 2.8 percentage points from the
75% strategy target. This rate also exceeded most non-EU G20 economies in the
world in 2017, except from Japan and Australia. Regarding the employment group
ages, the highest rate was recorded for people between 30 to 54 while the rate
was lower for young people from 20-29. Group (aged 55 to 64) although their
employment rate has grown continuously over the last decade, but it has
remained low compared to younger age groups. Also from gender perspective, even
though the employment gap has narrowed for all age groups since 2002 and in
2017 was at 11.5 percentage points, however the women employments rate remains
lower than men[10].

Gross domestic
expenditure on research and development (R&D) as a percentage of GDP has
slightly progressed between 2008 and 2012, reach 2.04% in 2015 and has
stagnated around 2.03% of GDP since then. By 2016 the EU was with 0.97
percentage points below its target for 2020 and in order to deliver the 3% of
GDP final strategy goal a combined public and private R&D expenditure was
needed taking into considerations that business enterprise share of the R&D
performing sector in the EU account for 64.9% of total R&D expenditure
while The shares of ‘higher education’ and ‘government’ sectors contribute less
to the total R&D expenditure, at 23.0% and 11.2%, respectively.

The EU emissions of
greenhouse gases (GHG) had fallen to 22.4% By 2016, compared with 1990 levels which
indicate that the EU is expected not only to reach but also to exceed its target
of reduction GHG emissions to 20% by 2020[12]. The industrial sector share of
total emissions reduction was the largest in 2016 even though it was still
responsible of the most emissions in absolute terms over the time period
between all sectors. Moreover the EU’s GHG levels of emissions per capita were much
lower than the levels observed in major economies such as Australia, Canada and
the United States, in addition to a significant progresses regarding the
renewable energy was achieved especially in Transport and electricity sectors
by using the bio-fuel (Solid, liquid and gaseous) that provided the biggest
share of total renewable energy used in transportation, and for heating and
cooling in the EU, and hydropower which remains the dominate technology in
electricity sector; furthermore, the shares of solar and wind energy have
raised essentially in the last decade. The share of renewable energy in gross
final energy production was 17.0% by 2016 only 3.0 percentage points from the
Europe target of 20% by 2020 and relatively high Comparing to other emerging
and industrialized economies in the world. Also a visible progress was made
regarding the 20% energy efficiency objective. The EU had significantly reduced
primary energy consumption by 10% in 2016 less than in 2005 and globally only
Japan had better results than EU by consuming 18.4% less energy in the same
year[11].

One of the most important
headlines of Europe 2020 was focusing on education. This target included: 1)achieving
less than 10% of early school leavers between 18-24 year old especially for men
because they are more likely to leave education earlier than women adding that
early leavers face crucial problems in labor market and have big probabilities
to stay inactive or unemployed; 2) increase the share of 30-34 year old who
have completed tertiary education to 40%. Since 2008 the rate of early leavers
dropped from 14.7% to 10.6% by 2017 and the share of people with high education
improved reaching 39.9%, which indicate that Europe is steadily approaching its
educational target even though it still have a gap with some major economies
like USA, Canada, and Korea in that area[12].

The strategy Europe 2020
aims to reduce the number of People at risk of poverty or social exclusion by
20 million till 2020 through focusing on: 1) the three commune forms of
poverty: monetary poverty, very low work intensity, and severe material
deprivation; 2) and The most exposed groups to the all three dimensions of
poverty, in other words young people, unemployed and inactive persons, single
parents, people with low educational, foreign citizens born outside the EU, and
those residing in rural areas. The EU witnessed high growth of risk of poverty
in the in the last decade due to the delayed social effects of financial
crisis, namely almost every fourth person (23.5% of the population) in the EU
remained at risk in 2016, about 86.9 million people, representing 17.3% of the
total EU population, were at risk of monetary poverty while 39.1 million or
10.5% were affected by the second most common dimension of poverty the very low
work intensity, and 37.8 million people equaled 7.5% of the total population in
the EU were suffering from the third form of poverty or social exclusion severe
material deprivation leaving the EU behind the strategy target by 20.7 million
people. Thus, Significant additional efforts are necessary to close this gap by
2020 [12].

Economic growth, social
cohesion and environmental protection along with a systemic change in policy
agenda were the long-term objectives of strategy 2020 in which all the three above
mentioned spheres go hand in hand and are mutually reinforcing in regional and
state levels. The strategy 2020 delivered its targets in most areas especially
in reducing emissions of greenhouse gases (GHG) to 20% compared to 1990 levels
and increasing the share of renewable energy in
final energy consumption to 20%, also in education by decreasing school
drop-out rates to less than 10% and increasing the share of the population aged
30-34 having completed tertiary education to 40%, and in employment by increasing
the employment rate of the population aged 20-64 to 75%. However, much less
success was found in the other two objectives: risk of poverty with a gap of
20.7 million people from the target set and spending on R&D with 0.97
percentage points below its target for 2020, thus a significant efforts are
needed to close those gaps until the end of the strategy time period. Moreover,
on the international level the EU 2020 strategy plays an important role in
addressing the adopted 2030 Agenda by world leaders at the United Nations in
September 2015 for Sustainable Development “Transforming our world”, the
agenda is a set of 17 guidelines with 169 associated goals on development and
thus sitting the EU on the right direction towards achieving a sustainable
future by shaping its internal and external policies, research and innovation
programs to balance a good standard of living for all Europeans, within the
limits of our planet.

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