While Nobel laureate economists Paul Krugman and Philippe Aghion disagree over how to measure Europe’s productivity gap with the United States, both overlook the value of its accumulated assets. That blind spot obscures the real story: Europe is living off a remarkable inheritance it has yet to convert into new growth.
DUBAI—The debate over European competitiveness has long focused on the widening gap with the United States. But that is the wrong question. What matters is not whether the gap is widening, but the fundamentally different mechanisms through which each economy creates wealth: Europe derives much of its wealth from accumulated assets; the US relies on the continual creation of new ones.
Read more here.