The Lisbon process, re-visited. A reality check of the European social model.

Tausch, Arno (2006): The Lisbon process, re-visited. A reality check of the European social model. Published in: Paper, prepared for the International Conference “Economic Relations in the Enlarged EU”. University of Wroclaw, Poland. Working Paper 16, International Relations Theory Program, Centro Argentino de Estudios Internacionales, Buenos Aires , Vol. 16), No. 1 (2006): pp. 1-84.

Abstract

This article portrays a bleak picture of European realities. Analyzing world social, gender, ecological and economic development on the basis of the main 9 predictors, compatible with the majority of the more than 240 published studies on the cross-national determinants of the “human condition” around the globe, we first present results of 32 equations about development performance in 131 countries with available data. We come to the conclusion that while there is some confirmation for the “blue”, market paradigm as the best and most viable way of world systems governance concerning economic growth, re-distribution and gender issues, the “red-green” counter-position is confirmed concerning such vital and basic indicators as life expectancy and the human development index. We also show that Europe’s crisis is not caused by what the neo-liberals term a “lack of world economic openness” but rather, on the contrary, by the enormous amount of passive globalization that Europe – together with Latin America – experienced over recent years. Our combined measure of the velocity of the globalization process is based on the increases of capital penetration over time, on the increases of economic openness over time, and on the decreases of the comparative price level over time: the United States, Mexico, larger parts of Africa and large sections of West and South Asia escaped from the combined pressures of globalization, while Eastern and Southern Latin America, very large parts of Europe, Russia and China were characterized by a specially high tempo of globalization. The “wider Europe” of the EU-25 is not too distantly away from the social realities of the more advanced Latin American countries. From the viewpoint of world systems theory such tendencies are not a coincidental movement along the historic ups and downs of social indicators, but the very symptom of a much more deep-rooted crisis, which is the beginning of the real re-marginalization and re-peripherization of the European continent. We finally also show the relevance of these assumptions for the analysis of European regional inequality. Established economics teaches us that for economic gaps to be bridged, a process of convergence sets in that was described by Bela Balassa and Paul Samuelson, independently from each other, more than 4 decades ago, and which is called ever since the “Balassa-Samuelson effect”. But a reversal of what was once known as the Balassa/Samuelson effect has set in, with falling prices of non-tradables in the highly developed European center countries. Our macro-quantitative calculations show that considering other important intervening factors, like development levels and human capital formation, the ultraliberal thinking inherent in the recent “Bolkestein directive” that should lead to a considerable lowering of price levels in the formerly “non-tradable” sectors of services in Europe would be certainly compatible with some aspects of growth and better employment (and thus also gender relations), but our three main other indicators of globalization, i.e. high foreign saving, “economic freedom” and high MNC penetration ratios, are still very systematically linked with severe deficits in the social sphere, whatever the research design chosen. And in addition, powerful forces of agglomeration propel Europe in the direction of further regional income concentration and inequality, thus blocking the hopes of the poorer segments of the East European new member countries. A process of catching up development seems under these conditions a very remote hope indeed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cross-Section Models; Income Distribution; Prices; Business Fluctuations; and Cycles – General; International Economic Order; Inequality; Economic Integration: General
• Subjects: F - International Economics > F1 - Trade > F15 - Economic Integration; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; F - International Economics > F5 - International Relations, National Security, and International Political Economy

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