The Great Recession has hit European economies hard, triggering sovereign debt crises and threatening the very survival of the Euro area. The main policy response adopted by European governments has been fiscal austerity, incarnated in the Fiscal Compact. However, fiscal-consolidation policies do not appear to have been successful. Indeed, the GDP of European member states is still below its potential level and in some economies is even lower than pre-crisis output, while unemployment remains very high. Moreover, a growing inconsistency has emerged between fiscal rigour and the Europe 2020 objectives of transforming Europe into the most competitive economy in the world. Indeed, austerity policies could damage the innovative performance of Europe, reducing potential GDP and preventing the achievement of the Horizon 2020 objective of achieving smart inclusive sustainable growth.
The objective of the ISIGrowth project, funded by Horizon 2020, is to understand how Europe could move towards a growth path that is innovation-fuelled, environmentally sustainable and socially inclusive. A key part of this challenge is the design of appropriate macroeconomic and fiscal policies - which emerge bottom-up from adequate assumptions on microeconomic behaviours - capable of sustaining demand expansion, employment creation, innovation and to support the necessary structural changes in the production systems. Our 2016 conference will bring together top macroeconomic experts with ISIGrowth researchers in order to discuss our research findings on the consequences of Europe’s fiscal austerity, their impact on innovation, and possible alternative solutions. Our aim is to both diagnose the problem and to suggest fundamentally new directions for policies which will lead to growth that is smarter, more inclusive and more sustainable. Given the participatory nature of the ISIGrowth project, the conference will be followed by a roundtable inviting policy makers.
Chairs: Giovanni Dosi and Mariana Mazzucato
Towards an era of renewed innovation-driven growth: some tentative policy suggestions
Introduction by Giovanni Dosi on current results of the ISIGrowth project