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The Europe 2020 Index

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Abstract

This paper presents a new index to quantify, measure and monitor the progress towards the objectives of the Europe 2020 strategy. This index is based on a set of relevant, accepted, credible, easy to monitor and robust indicators presented by the European Commission at the time the strategy was launched. The internal analysis of the index shows that the Smart and the Inclusive growth dimensions of the strategy are strictly correlated and that the trade-offs between each of these two dimensions and the Sustainable one exist but are decreasing, suggesting that a change towards more sustainable models of development is occurring in Europe. The external analysis of the index shows that it can be a valid measure to assess the overall competitiveness of countries and that the most critical factors for this strategy to be successful are good governance and social capital.

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Notes

  1. maxGGE = 193.90 (Cyprus 2008), minRNEW = 0.10 (Malta 2006), maxPOV = 61.30 (Bulgaria 2006).

  2. It defines globalization as the process of creating networks of connections among actors at multi-continental distances, mediated through a variety of flows including people, information and ideas, capital and goods. Globalization is conceptualized as a process that erodes national boundaries, integrates national economies, cultures, technologies and governance and produces complex relations of mutual interdependence. More specifically, the three dimensions of the KOF index are defined as: economic globalization, characterized as long distance flows of goods, capital and services as well as information and perceptions that accompany market exchanges; political globalization, characterized by a diffusion of government policies; and social globalization, expressed as the spread of ideas, information, images and people. It uses a linear aggregation method.

  3. The ten sub-indices are: Starting a business (Procedures, time, cost and minimum capital to open a new business); Dealing with construction permits (Procedures, time and cost to build a warehouse); Employing workers (Difficulty of hiring index, rigidity of hours of index, difficulty of redundancy index, rigidity of employment index, redundancy costs); Registering property (Procedures, time and cost to register commercial real estate); Getting credit (Strength of legal rights index, depth of credit information index); Protecting investors (Indices on the extent of disclosure, extent of director liability and ease of shareholder suits); Paying taxes (Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit); Trading across borders (Number of documents, cost and time necessary to export and import); Enforcing contracts (Procedures, time and cost to enforce a debt contract); Closing a business (Index of recovery rate which is a function of time, cost and other factors such as lending rate and the likelihood of the company continuing to operate).

  4. The index is built on 90 variables, of which two-thirds come from the Executive Opinion Survey, and one-third comes from publicly available sources such as the United Nations. The variables are organized into nine/twelve pillars, with each pillar representing an area considered as an important determinant of competitiveness. The GCI separates countries into three specific stages: factor-driven, efficiency-driven, and innovation-driven, each implying a growing degree of complexity in the operation of the economy. The GCI applies a linear aggregation method.

  5. This is valid for all the available years, from 1995 to 2009, compared to the values of 2006, 2007 and 2008 for the Europe 2020 Index. Pearson’s and Spearman’s coefficients values are comprised between +0.2 and −0.2.

  6. The indicators are a compilation of the perceptions of different groups of respondents, collected in large number of surveys and cross-country assessments of governance. Some of these instruments capture the views of firms, individuals, and public officials in the countries being assessed. Others reflect the views of NGOs and aid donors with considerable experience in the countries being assessed, while others are based on the assessments of commercial risk-rating agencies.

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Authors and Affiliations

  1. European Commission, Directorate General for Employment, Social Affairs and Inclusion, Rue del la Loi, 200, 1049, Brussels, Belgium

    Paolo Pasimeni

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  1. Paolo Pasimeni
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Correspondence to Paolo Pasimeni.

Additional information

The opinions expressed in this paper are the author's alone and do not reflect those of the European Commission. The author is grateful to Andrea Conte, Mikel Landabaso, Antonella Schulte-Braucks, Alessandra Tucci and an anonymous referee for their helpful comments and suggestions. Errors and omissions however are entirely the author's responsibility.

Appendices

Appendix 1: Indicators Composing the Europe 2020 Index

Tertiary education attainment (TEDU) available for the years: 2000–2009.

The share of the population aged 30–34 years who have successfully completed university or university-like (tertiary-level) education with an education level ISCED 1997 (International Standard Classification of Education) of 5–6. This indicator measures the Europe 2020 strategy’s headline target to increase the share of the 30–34 years old having completed tertiary or equivalent education to at least 40% in 2020. Data source: Eurostat.

Gross domestic expenditure on R&D (GERD) available for the years: 1990–2009.

The indicator provided is GERD (Gross domestic expenditure on R&D) as a percentage of GDP. “Research and experimental development (R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society and the use of this stock of knowledge to devise new applications” (Frascati Manual, 2002 edition, § 63). R&D is an activity where there are significant transfers of resources between units, organisations and sectors and it is important to trace the flow of R&D funds. Data source: Eurostat.

Greenhouse gas emissions (GGE) available for the years: 1990–2008.

This indicator shows trends in total man-made emissions of the “Kyoto basket” of greenhouse gases presenting annual total emissions in relation to 1990 emissions The “Kyoto basket” of greenhouse gases includes: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and the so-called F-gases (hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride (SF6)). These gases are aggregated into a single unit using gas-specific global warming potential (GWP) factors. The aggregated greenhouse gas emissions are expressed in units of CO2 equivalents. The indicator does not include emissions and removals related to land use, land-use change and forestry (LULUCF); nor does it include emissions from international aviation and international maritime transport. CO2 emissions from biomass with energy recovery are reported as a Memorandum item according to UNFCCC Guidelines and not included in national greenhouse gas totals. The EU as a whole is committed to achieving at least a 20% reduction of its greenhouse gas emissions by 2020 compared to 1990. This objective implies: a 21% reduction in emissions from sectors covered by the EU ETS (emission trading scheme) compared to 2005 by 2020; a reduction of 10% in emissions for sectors outside the EU ETS. To achieve this 10% overall target each Member State has agreed country-specific limits for 2020 compared to 2005 (Council Decision 2009/406/EC). Data Source: European Environment Agency.

Share of renewable energy in gross final energy consumption (RNEW) available for the years: 2006–2008.

This indicator is calculated on the basis of energy statistics covered by the Energy Statistics Regulation. It may be considered an estimate of the indicator described in Directive 2009/28/EC, as the statistical system for some renewable energy technologies is not yet fully developed to meet the requirements of this Directive. However, the contribution of these technologies is rather marginal for the time being. More information about the renewable energy shares calculation methodology and Eurostat’s annual energy statistics can be found in the Renewable Energy Directive 2009/28/EC, the Energy Statistics Regulation 1099/2008 and in the transparency platform of the Directorate General for ENERGY http://ec.europa.eu/energy/renewables/index_en.htm. Data source: Eurostat.

Energy intensity of the economy (EINT) available for the years: 1990–2008.

This indicator is the ratio between the gross inland consumption of energy and the gross domestic product (GDP) for a given calendar year. It measures the energy consumption of an economy and its overall energy efficiency. The gross inland consumption of energy is calculated as the sum of the gross inland consumption of five energy types: coal, electricity, oil, natural gas and renewable energy sources. The GDP figures are taken at chain linked volumes with reference year 2000. The energy intensity ratio is determined by dividing the gross inland consumption by the GDP. Since gross inland consumption is measured in kgoe (kilogram of oil equivalent) and GDP in 1000 EUR, this ratio is measured in kgoe per 1000 EUR. Data source: Eurostat.

Employment rate of the population aged 20–64 (EMPL) available for the years: 1992–2009.

The employment rate is calculated by dividing the number of persons aged 20–64 in employment by the total population of the same age group. The indicator is based on the EU Labour Force Survey. The survey covers the entire population living in private households and excludes those in collective households such as boarding houses, halls of residence and hospitals. Employed population consists of those persons who during the reference week did any work for pay or profit for at least 1 h, or were not working but had jobs from which they were temporarily absent. Data source: Eurostat.

Early leavers from education (SCHO) available for the years: 1992–2009.

Percentage of the population aged 18–24 with at most lower secondary education and not in further education or training. From 20 November 2009, this indicator is based on annual averages of quarterly data instead of one unique reference quarter in spring. Early leavers from education and training refers to persons aged 18–24 fulfilling the following two conditions: first, the highest level of education or training attained is ISCED 0, 1, 2 or 3c short, second, respondents declared not having received any education or training in the 4 weeks preceding the survey (numerator). The denominator consists of the total population of the same age group, excluding no answers to the questions “highest level of education or training attained” and “participation to education and training”. Both the numerators and the denominators come from the EU Labour Force Survey.

Population at-risk-of-poverty or exclusion (POV) available for the years: 2003–2009.

The Europe 2020 strategy promotes social inclusion, in particular through the reduction of poverty, by aiming to lift at least 20 million people out of the risk of poverty and exclusion. This indicator summarizes number of people who are either at risk-of-poverty and/or materially deprived and/or living in households with very low work intensity. Interactions between the indicators are excluded. At risk-of-poverty are persons with an equivalised disposable income below the risk-of-poverty threshold, which is set at 60% of the national median equivalised disposable income (after social transfers). The collection “material deprivation” covers indicators relating to economic strain, durables, housing and environment of the dwelling. Severely materially deprived persons have living conditions severely constrained by a lack of resources, they experience at least four out of nine following deprivations items: cannot afford (i) to pay rent or utility bills, (ii) keep home adequately warm, (iii) face unexpected expenses, (iv) eat meat, fish or a protein equivalent every second day, (v) a week holiday away from home, (vi) a car, (vii) a washing machine, (viii) a colour TV, or (ix) a telephone. People living in households with very low work intensity are people aged 0–59 living in households where the adults work less than 20% of their total work potential during the past year. Data source: Eurostat.

Appendix 2: Reference Values

When applying (1):

$$ X_{ic} = \frac{{x_{ic} - \min_{k} \{ x_{ik} \} }}{{\max_{k} \{ x_{ik} \} - \min_{k} \{ x_{ik} \} }} $$

and (2):

$$ X_{ic} = \frac{{\max_{k} \{ x_{ik} \} - x_{ic} }}{{\max_{k} \{ x_{ik} \} - \min_{k} \{ x_{ik} \} }} $$

a choice needed to be done on which lower bound and upper bound to use. After several analyses and review of the main composed indices used in the economic literature, it seemed the most reasonable choice to select as fixed bounds the lowest and highest values across the full time series for each indicator.

This is the list of the chosen values:

maxTEDU = 49.00 (Ireland 2009); minTEDU = 7.40 (Malta 2000)

maxGERD = 4.13 (Sweden 2001); minGERD = 0.22 (Cyprus 1998)

maxGGE = 193.90 (Cyprus 2008); minGGE = 38.10 (Latvia 2000)

maxRNEW = 44.40 (Sweden 2008); minRNEW = 0.10 (Malta 2006)

maxEINT = 2306.38 (Bulgaria 1993); minEINT = 103.13 (Denmark 2008)

maxEMPL = 81.10 (Sweden 1992); minEMPL = 51.30 (Spain 1993)

maxSCHO = 54.40 (Malta 2001); minSCHO = 4.10 (Slovenia 2007)

maxPOV = 61.30 (Bulgaria 2006); minPOV = 13.90 (Sweden 2007)

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Pasimeni, P. The Europe 2020 Index. Soc Indic Res 110, 613–635 (2013). https://doi.org/10.1007/s11205-011-9948-9

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