IMF Blog,update

 

Dear MARIA, We just published a new blog—read the full text below. Europe Can Regain Its Productivity Edge by Scaling Up (Credit: golero/iStock by Getty Images) By Stephan Danninger Europe once led the world in productivity growth but now lags the United States —and the gap has widened significantly in recent years.   The Chart of the Week shows that behind this shortfall is the staggering difficulty that European firms face in scaling up. In the United States, the stock market valuation of young firms (under the age of 50) is $42.9 trillion, compared to a meager $5 trillion in the European Union.     This reflects imperfections in European integration. For all the achievements of the European single market, capital flows remain fragmented along national lines, opportunities for workers are hampered by regulations, and it is often difficult to market products across borders. The result is that the EU has too many small, old, and low-growth companies. The average European firm that has been in business for 25 years or more employs about 10 workers. A comparable US company employs 70 people.   It is therefore no surprise that Europe’s labor productivity levels are about 20 percent below those of the United States.   Our research shows that addressing this issue requires integration at various levels: of capital markets, to allow more funding to go to risky new businesses; of labor markets, to allow people to move to opportunity; and of consumer markets, so that companies can sell to bigger markets. The good news is that these are all changes that Europe can bring about. Read the blog Thank you again for your interest in the IMF Blog. Please write to us directly and let us know your thoughts. We would love to hear from you.   Jeff Kearns  Managing Editor | IMF Blog   jkearns@IMF.org Stay connected with the International Monetary Fund:       This email was sent to politikimx@gmail.com on behalf of: International Monetary Fund 1900 Pennsylvania Ave NW · Washington, DC · 20431