Structural reforms and the benefits of the enlarged EU internal market: still much to be gained

Abstract

In the light of recent calls for additional structural reforms in Europe, this article looks at the role that a reduction of remaining barriers for integration and competition in the EU internal market can play in this context. This article presents new estimates of the likely impact of product market reform on labour productivity in old and new EU member countries, with a particular focus on network industries, professional services and retail trade. These estimates reveal that labour productivity could be boosted by an average of 10% over a time horizon of 10 years, in reward for a reform agenda that would align the stringency of anti-competitive regulation in services sectors to European best practice across all countries.

Notes

An earlier version of this article was presented for the Workshop ‘EU Internal Market’ at the Conference on ‘EU Enlargement – 5 Years After’ on 2 March 2009 and was subsequently published as Economics Department Working Paper No. 694. This article represents the views of the authors and should not be interpreted as representing the views of the OECD or its member governments.

¹This approach is in line with Ilzkovitz et al. (2008) who identified four obstacles to a better working of the internal market: regulation, integration, competition and innovation. Problems in particular are identified in the areas of competition and innovation, thereby also shedding some light on the disappointing productivity performance of European economies.