This report written by Ian Brinkley and Neil Lee, was prepared for the 2007 EU Spring Council by the Work Foundation. It provides an interesting overview of the European situation in the fields of technology based manufacturing and knowledge based services in Europe, including the repartition of employment per country.

The report also compares the Knowledge Based Economy in Europe with the situation in United States. According to the Work Foundation, "Europe has seen a significant expansion in her knowledge industries over the past decade and at a similar rate to the expansion of knowledge based employment in the US. Moreover, in 2005 the size of Europe’s knowledge economy measured by the share of total employment in knowledge industries is similar to the US. What Europe has not seen is the accompanying economic dynamism of faster growth and higher productivity. Productivity growth has fallen in many EU States rather than accelerating, in contrast to the US."

The key underlying reason is a slow down in the pace of  technological innovation and a failure to increase investment in knowledge across the EU.

The report then analysis major key issues such as the innovation policy, taxes, the role of regulation, the European social model and their consequences on the slow down development of the Knowledge based Economy in Europe. Is the social model responsible ?  No, argues the report, "the strong performance of the Nordic economies suggests there is nothing fundamentally incompatible with modern European social models and the development of a knowledge based economy." One reason pointed out is the lake of investment in Research and Development: "Europe has expanded the number of knowledge jobs but has not made the underpinning investment in knowledge that would release wider economic benefits."

This publication is being part of a larger programme implemented by the foundation untitled "The Knowledge Economy Programme". In April 2006, The Work Foundation began a three-year, £1.5 million research programme to provide  greater insight into the way  we work, how the economy is changing  and the social, corporate and political consequences of this.
 
This report as well as additional papers focusing on the Knowledge Economy and its assessments may be downloaded for free from the Web site of the Foundation.
Picture credit : The Word Foundation.