The economics of knowledge: why education is key for Europe's success

When European Union (EU) heads of state and government met at a summit in Lisbon in 2000, they set the goal of making Europe 'the most competitive and dynamic knowledge-based economy in the world'. In a knowledge economy, the 'most effective modern economies will be those that produce the most information and knowledge, and make that information and knowledge easily accessible to the greatest number of individuals and enterprises'. This policy brief suggests that individuals and companies based anywhere in the world can now easily collaborate and compete globally, and that the solution for Europe in meeting the Lisbon goals is to invest heavily in education and skills. Using statistical evidence, the brief demonstrates the high returns to investment in education. It makes recommendations for ensuring that Europe's school systems become more flexible and effective in improving learning outcomes, and argues that Europe’s capacity to compete in the global knowledge economy will depend on whether its higher education institutions can meet the rapidly growing demand for high-level skills. International comparisons demonstrate the challenges confronting Europe but also illustrate the success of efforts to meet such challenges in other countries such as Finland. Education and skills will be key for Europe to achieve its ambitious Lisbon goals and the task for European governments will be to ensure that European countries meet the challenge. Show less