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Europe left with bitter regrets after getting worse off

Posted September. 11, 2023 08:22,   

Updated September. 11, 2023 08:22


A recent op-ed by a New York correspondent at Le Monde resonated with many French people. The column titled “The GDP gap between Europe and the United States is now 80%” indicates that the U.S. earns 1.8 times as high as gross domestic product (GDP) as Europe. Given that it has long been posted as one of the most-read news articles on the newspaper's website, the message may have shocked many French readers. Europe and the United States have competed against each other and formed quite a Western World duo in the global economic arena.

The difference in GDP seems more serious when European countries compared with each U.S. state. For example, Italy's GDP is slightly ahead of that of Mississippi - one of the poorest regions among the 50 U.S. states, according to the non-profit think tank European Center for International Political Economy. France is also placed somewhere between the No. 48 Idaho and the No. 49 Arkansas. Things are no different in terms of competitiveness in consumer goods. It has long been considered the case that Mercedes Benz or BMW, produced by Europe's industrial powerhouse of Germany, are apparently less competitive than U.S. giant Tesla.

The changes in economic influence are also reshaping the cultural landscape. In particular, the United States has recently become a greater influence across Europe. As recently as 20 years ago when I stayed in the French capital of Paris, the Parisians, noticeably proud of their mother language, normally gave the cold shoulder to English-speaking expats. Palpably, I felt that I was put under some implicitly stubborn pressure to learn and speak the French language in the French community, which was taken for granted back then. However, things have recently changed a lot. Many French citizens I speak to in English even apologize for not speaking English. Likewise, French parents today competitively send their children to English learning camps during breaks, which is quite a different atmosphere compared to 2008, for instance, when French teachers’ unions reacted strongly against the government's policy to promote English training programs during breaks, arguing that the mother tongue should take top priority in education.

To be sure, mere economic indices are never a single measure of success. Thanks to its advanced welfare systems and other favorable residential conditions, Europe is considered a better place to live. That is why a growing number of U.S. citizens migrate to Europe because they have had enough of racial hate crimes and severe social inequalities. For the past five years, U.S. nationals granted residence permits have increased 55 percent and 13 percent in the Netherlands and Spain, respectively. There was a three-fold rise in Portugal as well.

However, Europeans are not in a position to stay relieved and satisfied. They have suffered a painful economic recession since Russia invaded Ukraine last February. No matter how attractive social benefits they have to offer, bread-and-butter economics is a prerequisite for a secure life.

Against this backdrop, many voices reflect on the past from an introspective viewpoint. Critics point out that European nations failed to make a nimble investment in new technologies in the early 2000s when big tech firms sprouted, arguing that Europe could not come up with promising contenders against Apple and Google, which both have contributed significantly to the U.S. stock market when they started growing. At a meeting held by the European Council in Lisbon, Portugal in 2000, European leaders only made an ambitious declaration that they would build the world's most competitive and dynamic knowledge-based economic platform by 2010, but their words fell through.

Others regret not improving labor productivity, lamenting that European producers should have listened carefully to Daron Acemoglu when he talked about the consequences of lower productivity in his book “Why Nations Fail” 10 years ago. Looking back, they know from experience that better productivity would have brought more benefits to companies and employees, strengthening the economy.

Countries such as South Korea should seriously take and study Europe's remorseful experience, where AI tech revolutions are blooming, and population aging and low birthrates are already a norm. As Europe compares with the United States, the South Korean economy typically compares and contrasts with Japan's. There has been a growing gap in economic growth between the two countries. In the first quarter of this year, South Korea recorded 0.3 percent in GDP growth, only a third of Japan's 0.9 percent. The difference worsened in the second quarter with the former growing 0.6 percent and the latter recording 1.5 percent. If this is the case, South Korea will be outpaced by Japan in terms of yearly economic growth for the first time in 25 years since 1998, right after the Asian Financial Crisis just broke out. I hope that the realities of Europe and the United States will be déjà vu again for South Korea someday.