The following is a translation of an article written by Piroska Szalai, labour market expert and research fellow at the Economy and Competitiveness Research Institute of the Ludovika University of Public Service, and Gábor Kutasi, head of the same institute, originally published on the Ludecon blog of Ludovika.hu.
For the EU, the polycrisis is not over yet. After the COVID–19 shutdown, followed by a wave of inflation shocks, European policymakers are now facing a competitiveness crisis, after this year has almost passed without robust economic growth. The latter is closely linked to the not-so-heartening practical experience of de-growth.
Mihály Varga, Minister of Finance, is giving his opening speech at the annual conference of the Economy and Competitiveness Research Institute of the University of Public Service on 28 November, on current issues in the Hungarian economy. This time, the focus is on competitiveness, which is of broad concern to the European Union.
Before 2020 Europe was the second most competitive region in the world, today, however, many believe we have lost this position. Many of our indicators are worse today than they were in 2019, and our economic growth is much lower than in other parts of the world economy, whether in Asia or the Americas.
The Hungarian National Bank defines competitiveness as ‘the quality of the set of factors that determine the economy’s long-term performance, including productivity, the quantity and quality of human capital, technological progress, the regulatory environment, entrepreneurial attitudes, financing opportunities, and social and environmental sustainability’.
‘Before 2020 Europe was the second most competitive region in the world, today, however, many believe we have lost this position’
Mario Draghi, former Prime Minister of Italy and President of the European Central Bank, also sounded the alarm in his report The Future of European Competitiveness, presented in September.
Earlier this month, European Union leaders, meeting in Budapest following the European Political Community, adopted a New European Competitiveness Deal to make the European Union more future-proof. The Deal states: ‘It is imperative that we urgently close the innovation and productivity gap, both with our global competitors and within the EU.’
The challenges generated by the demographic change are increasingly urgent. Ageing populations and declining birth rates are putting enhanced pressure on public financing systems and threatening long-term economic sustainability, therefore, the conference aims to explore the economic and social consequences of demographic change and discuss possible solutions. Particular emphasis will be placed on measures to ensure fiscal sustainability, labour market restructuring, and measures to preserve the sustainability of pension systems. Participants will discuss the challenges facing governments and businesses, as well as opportunities for international cooperation.
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