Why Lisbon Fails

Posted: 17 Mar 2009

See all articles by Michele Ruta

Michele Ruta

Economic Research Division, WTO; Columbia Business School - Economics Department; International Monetary Fund (IMF)

Date Written: March 2009


This article looks at the political economy of structural reforms and growth in the European Union. As the EU's; economy approaches the world technology frontier, structural reforms that increase competition in intermediate goods sectors are necessary to boost innovation and productivity growth—the main objective of the Lisbon Agenda. Such reforms, however, raise the opposition of incumbents and, therefore, are politically difficult to implement. When there are important policy spillover effects, national governments are more easily captured by vested interests, as they fail to internalize the benefits of reforms on the rest of the Union. This suggests that the weak political governance of the Lisbon Agenda, which is centred on the peer pressure of national governments, and the ensuing inability to complete the single market in non-manufacturing sectors, explains the Lisbon failure. (JEL classification: D72, F42, O30, O40)

Keywords: European Union, structural reforms, lobbying, growth

Suggested Citation

Ruta, Michele, Why Lisbon Fails (March 2009). CESifo Economic Studies, Vol. 55, Issue 1, pp. 145-164, 2009, Available at SSRN: https://ssrn.com/abstract=1359550 or http://dx.doi.org/ifn027

Michele Ruta (Contact Author)

Economic Research Division, WTO ( email )

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Columbia Business School - Economics Department ( email )

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International Monetary Fund (IMF) ( email )

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