The “Lisbon Goal” of the EU: Rhetoric or Substance?

Abstract

This paper explores the relationship between the rhetoric of the Lisbon Goal of the EU and key insights from trade theory and growth theory. It argues that the policy initiative as such is valid, but the paradigm of international competitiveness is potentially misleading. The focus should, instead, be on productivity. Industrial policies, while potentially valid against the backdrop of recent developments in growth theory, are subject to pitfalls in practice. Policies focusing on institutions are more promising. The paper offers a framework for discussing the role of different types of institutions with respect to the Lisbon Goal.