Lessons to be learnt from Europe’s (growth, budget, solidarity and influence) deficits.

http://www.observer.ug/index.php?option=com_content&view=article&id=8036:lessons-to-be-learnt-from-europes-deficits&catid=38:business&Itemid=68

"Bruegel, a respected Brussels economic think tank, has calculated that in the past, the EU was able to offset its growth deficit with the consumption booms generated through adding on new member states. This kept the EU's share in the world economy roughly stable at 20% over the past four decades. However, barring the unlikely accession of Turkey and the Ukraine, Bruegel says, the EU's potential for growth by extending its borders has now been exhausted.

That growth deficit is compounded by an innovation deficit: the EU's Lisbon Strategy set a target of spending 3 per cent GDP on research and development (R&D) but reached just 1.7%. The USA by comparison spends about 2.6%, China around 1.5%, India just under 1%. "The EU," Mr. Barroso says, "was largely a first mover in green solutions. But advantage is being challenged by key competitors, notably China and North America."

In Southeast Asia, the EU's free trade talks with the Association of Southeast Asian Nations (ASEAN) collapsed while China's free trade area (FTA) with ASEAN (total population of China and ASEAN - 2 billion) went into force this January.

In Africa, where China is busy building roads, ports and news markets, an EU-Africa Strategy launched in 2007 has yet to produce tangible results. In Latin America, EU free trade talks with MERCOSUR countries Argentina, Brazil, Paraguay and Uruguay (and soon, Venezuela), froze in 2004 and were revived only recently and without much spark. On the surface, the EU's deficit in firming up its alliances or building political influence may seem odd. Europe is seen as a model for regional integration around the world. MERCOSUR openly acknowledges it. So do East Africa and ASEAN, both of which embarked on free trade areas this year and are working towards a common currency.