Wednesday, 6 June 2007

EU's Harmonization of Conditions does not boost Competition

This month in The European Journal, the Slovakian economist, Peter Gonda, defeats the claims from EU officials that the centralization and harmonization of conditions within Europe will lead to a more competitive economy. As he argues:

“Managed harmonization (unification) from above does not boost the competitive environment and the competitiveness of the entities within the EU. On the contrary, it has an inverse effect. Such harmonisation causes an undesirable leveling and reduces the motivation to become better and more successful, restricts competition and the search for better conditions, thus reducing economic performance and the standard of living in the EU. So, centralized harmonisation and its aim of a more competitive environment not only impairs competitiveness, but it even goes against (the otherwise absurd) aim of the EU – an increase in competitiveness.”

Indeed, it is obvious that such harmonisation causes a social and economic leveling and in principle, reduces the motivation and incentive for individuals to progress. EU officials themselves have sometimes referred to a leveling with regards to economic competitiveness, so it is well worth a read. To read Peter Gonda’s article, click here.

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