Whose Economic Reform?
PARIS – Together with fiscal consolidation, structural reform is the new European mantra. International organizations and European Union bodies regard such reform as a prerequisite of economic recovery, growth, and alleviation of the unemployment plague.
Indeed, the agreement reached between the Greek government and the “troika” (the International Monetary Fund, the European Central Bank, and the European Commission) includes a 48-page list of detailed reforms. Not all countries are given such a long to-do list, but, since new EU legislation was adopted in 2010, specific recommendations are addressed to all. For example, the brief addressed to Italy includes recommendations on the efficiency of public administration, the fight against corruption, corporate governance in the banking sector, the labor market, schools, taxation, opening up the services sector, and infrastructure.
To be sure, European countries urgently need to implement deep reforms. Poor productivity growth and stubborn unemployment are evidence that their economies require comprehensive transformation. But if this observation provides the rationale for reform, it does not provide a firm enough basis for drawing up effective economic-revival plans.