European economy news. No 6, April 2007.
Date: 2006-07-11
Institutions: Directorate-General for Economic and Financial Affairs
Subjects: EU policy, economic policy, financial policy, serial publication

No 6 

April 2007

EUROPEAN ECONOMY
news
The EU at 50
The EU at 50
A cause for celebration  
A cause for celebration  

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Half a century of economic integration in Europe
Joaquín Almunia: The EU and EMU – past and future 
Tommaso Padoa-Schioppa: Economic growth in Europe 
Michael Deppler: EMU – a view from outside 
Ivo Maes: The evolution of economic thinking at the Commission 
The economy of Poland: at a crossroads  

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Magazine of the Directorate-General for Economic and Financial Affairs

E U RO P E A N
COMMISSION

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EUROPEAN ECONOMY NEWS   N° 6 - APRIL 2007

Editorial

Dear Reader

The signature of the Treaty of Rome 50 years ago on 25 March 1957 launched a process of progressive European integration 
that we are celebrating this year. During this time, Europe has come together in many different areas of activity, from space 
to the seas and corporate governance to consumer protection. It is only eight years ago that the euro, perhaps the most 
tangible feature of European integration, first appeared. This, one might think, suggests that attention to economic and 
monetary matters is a relatively recent occurrence in EU affairs, but of course this is not so. The desirability of some form of 
economic and monetary union has been a continuous thread running through EU thinking over the past 50 years. However, 
turbulence of global currency markets and economic crises, as well as a lack of policy convergence in Europe, prevented its 
implementation earlier.

In this sixth issue of European Economy News we have invited a number of distinguished personalities to give their views 
on economic integration in the EU – past, present and future. Our Commissioner of Economic and Monetary Affairs, Joaquín 
Almunia, sets the broader scene in the first contribution where he reminds us of the real fragmentation of Europe in the initial 
post-war period, and how progressive enlargement and integration has changed that situation almost beyond recognition.

Klaus Regling, Director-General of 
the Economic and Financial Affairs DG

In the second article, Tommaso Padoa-Schioppa gives a historical overview of Economic and Monetary Union. Now Minister for 
Economic Affairs and Finance in the Italian government, Professor Padoa-Schioppa was one of the intellectual driving forces 
behind the introduction of EMU and the euro. His report in 1986 on efficiency, stability and equity laid the foundation for the subsequent development of economic 
and monetary integration. Director-General of DG ECFIN (then DG II) from 1979 to 1983, Professor Padoa-Schioppa later served as one of the first executive board 
members of the ECB. 

We then have a view from outside the EU, from Michael Deppler who has been Director of the European Department of the IMF since the preparations and launch of 
the euro. He gives a summary of how international economists have looked at the intricacies of European integration, and in particular economic integration, with both 
some bemusement and wonder. To complete the contributions, Ivo Maes, Deputy Head of Research at the National Bank of Belgium and Professor at the University 
of Leuven, presents a history of economic thinking within the European Commission – describing the balance between early Franco-German approaches and later 
Anglo-American influences and the role of the EU institutions. 

Our final article continues our series of Member State economic profiles with a look at the economy of Poland, the largest of the former communist states to join the 
EU family. In common with other EU-10 Member States, Poland is working to ensure a sustainable economy while achieving economic convergence with the EU.

Klaus Regling
Director-General, Economic and Financial Affairs DG

Editorial information
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EUROPEAN ECONOMY NEWS   N° 6 - APRIL 2007 

RECENT PUBLICATIONS 

15

Recent research and analysis 
published by DG ECFIN 

The pension reform challenge in Turkey

By Dirk Verbeken of DG ECFIN. COUNTRY FOCUS, 
Volume  IV,  Issue  3,  February  2007,  European 
Commission.

Facing  a  rapidly  growing  social  security  deficit 
of  4.8%  of  GDP  in  2005, Turkey  is  introducing  a 
comprehensive pension reform to unify the currently 
dispersed system and reduce the deficit to less than 
1% of GDP by 2035. Yet with a young and growing 
working-age population, Turkey should not have a 
deficit. Furthermore, today’s demographic advantage 
is expected to disappear within the next 30 years. 
This  study  reviews  the  relevant  factors  and  the 
pension reform package and concludes that, while 
the  reforms  are  a  commendable  step  in  the  right 
direction, they are not enough to build a sustainable 
system for the future – more comprehensive reforms 
are needed urgently.

Country Study: Raising Germany’s growth 
potential

By  the  staff  of  DG  ECFIN.  EUROPEAN  ECONOMY, 
OCCASIONAL  PAPERS,  No  28,  February  2007, 
European Commission. ISBN 978-92-79-04686-5

Germany’s GDP growth in 2006 was the strongest 
for  the  last  six  years,  benefiting  public  finances 
and employment. This study analyses whether this 
economic upswing will be lasting, or is only a cyclical 
swing  around  a  feebler  trend. The  authors  show 
that  although  the  drag  on  economic  performance 
resulting from reunification is easing, other factors 
are  restraining  potential  growth  and  causing  low 
labour force participation and high unemployment, 
such as finance and tax obstacles to investment. It 
then proposes ways to boost productivity and argues 
for a comprehensive reform agenda.

Foreign Direct Investment in the Czech 
Republic: A challenge for domestic firms

By Neil Kay of DG ECFIN. COUNTRY FOCUS, Volume 
IV, Issue 2, February 2007, European Commission.

Among the countries of Central and Eastern Europe, 
the  Czech  Republic  has  been  one  of  the  primary 
recipients  of  investment  from  abroad.  Sound 
economic  policies  and  early  privatisations  have 

attracted  substantial  foreign  investments  over  the 
past 15 years, which have, in turn, profoundly affected 
the structure and performance of the economy. In 
this  article  the  author  looks  at  how  this  FDI  has 
influenced productivity and markets, and considers 
the spillover effects on domestic firms.

Steps towards a deeper economic integration: 
the Internal Market in the 21st century. 
A contribution to the Single Market Review.

By  Fabienne  Ilzkovitz,  Adriaan  Dierx,  Viktoria 
Kovacs and Nuno Sousa of DG ECFIN. EUROPEAN 
ECONOMY,  ECONOMIC  PAPERS,  No  271,  January 
2007, European Commission. ISSN 1725-3187 

Later  in  2007,  the  European  Commission  will 
publish  a  review  of  the  European  single  market, 
also  called  the  internal  market.  In  preparation  for 
that review, the authors present empirical evidence 
on trade figures, FDI, M&A, price developments and 
regulation. This  is  then  analysed  to  discover  the 
achievements  of  European  economic  integration 
and what barriers still exist. The authors reflect on 
possible  improvements,  including  promoting  an 
internal  market  for  knowledge  and  encouraging 
more consistency between the internal market rules 
and external trade policies.

101 Proposals to reform the Stability and 
Growth Pact. Why so many? A Survey.

By Jonas Fischer, Lars Jonung and Martin Larch of DG 
ECFIN. EUROPEAN ECONOMY, ECONOMIC PAPERS, 
No 267, January 2007, European Commission. ISBN 
92-79-03843-5

The  problems  some  EU  Member  States  had  with 
meeting the requirements of the Stability and Growth 
Pact in recent years led to a heated debate on how 
to reform it. A measure of this ‘heat’ is the number 
of different proposals for improvement – 101 in all 
– presented by professional and academic economists 
from across the EU. In this paper the authors analyse 
these proposals and classify them broadly into four 
schools of thought on how best to coordinate fiscal 
policy. The reason for so many proposals, say the authors, 
is the evident lack of consensus in the profession on 
fiscal  policy  coordination,  in  sharp  contrast  to  the 
■
general agreement on monetary policy issues. 

A new periodic publication 
from DG ECFIN

The European  Economy  Research  Letter is 
a  new publication  aimed  at  professional  and 
 academic economists with an interest in the aca-
demic research work of the Directorate-General. 

Content includes articles on the current research 
under way at the DG, including work in progress 
and  upcoming  research  publications.  Recent 
publications  and  DG  ECFIN  conferences  and 
workshops are also covered, as is the work of 
visiting fellows and partner research institutions.

The Research Letter will be a regular electronic 
publication available on the DG ECFIN website. 
Interested readers can subscribe to an email 
notification service.

The first issue will be on-line from April 2007.

http://ec.europa.eu/economy_finance/
publications/researchletter_en.htm 

The  Directorate  for  Economic  and  Financial 
Affairs  publishes  frequently  on  economic 
research  relevant  to  the  European  Union; 
only  a  selection  of  these  articles  is  reported 
here.  A  complete  list  of  downloadable 
publications is available at http://ec.europa.eu/
economy_finance/publications_en.htm

Selected upcoming publications:
(cid:129)  Public Finances in EMU – 2007
(cid:129)  Exchange rate regimes in the Balkans
(cid:129)  Pensions and fiscal targets
(cid:129)  Saving in an ageing economy

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FORTHCOMING EVENTS 

EUROPEAN ECONOMY NEWS   N° 6 - APRIL 2007

For your diary

The Brussels Economic Forum
31 May to 1 June 2007, Brussels

Global adjustment and EMU
The  BEF  is  DG  ECFIN’s  premier  conference  on 
European economic issues. The 2007 BEF looks at 
EMU in the world through three sessions: unwinding 
global  imbalances,  adjustment  and  integration 
dynamics  in  EMU,  and  fostering  catching-up 
and  cohesion  in  the  EU.  Conference  contributors 
will  come  from  countries  and  international 
organisations  from  across  Europe  as  well  as  the 
US and Asia. Registration is now open on the DG 
ECFIN website. 

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Euroframe conference
8 June 2007, Bologna

Towards an ageing and globalising Europe: 
challenges for the European Social Model(s) 

The  Euroframe  group  of  research  institutes  will 
hold  its  fourth  annual  conference  on  economic 
policy issues in the EU: in this case, concentrating 

on  demographic  change,  globalisation  and 
the  challenges  these  pose  for  European 
social  models.  Participants  will  consider  social 
reforms  that  have  been  undertaken  in  the 
Member  States,  what  lessons  they  hold,  and 
how  economic  forecasting  tools  might  help 
evaluate  different  options  for  the  future.  For 
more  information  see  the  Euroframe  website: 
http://www.euroframe.org

OECD World Forum
27-30 June 2007, Istanbul

Measuring and fostering the progress 
of societies

The  second  OECD World  Forum  on  Statistics, 
Knowledge and Policy, organised in co-operation 
with the European Commission, the UN and the 
World  Bank,  will  be  held  on  the  Bosphorus  in 
2007. The  conference  will  provide  opportunities 
for in-depth discussions on measuring progress in 
the face of climate change, health concerns and 
economic  globalisation.  Commissioner  Joaquín 
Almunia  will  join  other  high-profile  speakers  in 
contributing  to  this  international  dialogue  on 
identifying gaps in our knowledge, and how these 
might be closed through new, widely applicable 
indicators  for  progress.  More  information  is 
available from the OECD website. 
http://www.oecd.org

DG ECFIN research conference
11-12 October 2007, Brussels

Growth and income distribution in an 
integrated Europe: does EMU make a 
difference?

This  annual  ECFIN  research  conference  will 
answer questions on the complex links between 
growth and income distribution in an increasingly 
integrated  EU.  How  is  wealth  distribution 
changing? What  factors  are  driving  changes? 
Does  EMU  make  a  difference? And  more. With 
keynote  speakers  from  across  Europe  and  the 
US,  the  conference  will  include  academic  and 
practising economists contributing original work 
on these issues. For more information see events 
on the DG ECFIN website. 

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ECB workshop
14-15 November 2007, Frankfurt

The analysis of money market: role, 
challenges and implications from the 
monetary policy perspective
The  money  market’s  expectations  and  behaviour 
are  strongly  influenced  by  monetary  policy  stance 
and  decisions  of  the  European  Central  Bank. At 
this  workshop,  central  bankers,  researchers  and 
practitioners involved in money market analysis will 
discuss  issues  of  the  linkages  between  monetary 
policy and money markets – covering predictability, 
expectations, transmission mechanisms and volatility. 
For more information see events on the ECB website: 
http://www.ecb.eu

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ECB workshop 
30 November to 1 December 2007, Frankfurt

Forecast uncertainty in macroeconomics 
and finance
This fifth ECB workshop on forecasting techniques 
will  present  recent  theoretical  and  empirical 
contributions  on  forecast  uncertainty  in  the  areas 
of macroeconomics and finance. The assessment of 
forecasts is of particular interest to those who use 
them,  and  who  are  confronted  with  the  need  to 
evaluate the importance of forecasts from different 
sources and models. For more information see events 
on the ECB website: http://www.ecb.eu 

 Further information
A list of events organised by DG ECFIN is 
available at: 

http://www.economy_finance/events_en.htm

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