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International Business Professor Warns U.S. Against Writing Off Europe

In a recent contribution to International Affairs Forum, Penn State Smeal College of Business Professor Terrence Guay argues that Americans should attempt to better understand the complexities of the European region with the goal of adopting best practices in areas where certain European countries outperform the U.S.
February 25, 2014

In a recent contribution to International Affairs Forum, Penn State Smeal College of Business Professor Terrence Guay argues that Americans should attempt to better understand the complexities of the European region with the goal of adopting best practices in areas where certain European countries outperform the U.S.

Guay, clinical professor of international business, writes that though some European countries are struggling economically—Greece and Spain, for instance, have unemployment rates exceeding 25 percent—these situations are not typical of Europe as a whole.

“Most of northern Europe is performing far better than southern Europe, and even the U.S. Strong vocational training programs in Austria, Denmark, and Germany contribute to those countries’ enviably low unemployment rates.”

In fact, he writes, “Most of northern Europe is performing far better than southern Europe, and even the U.S. Strong vocational training programs in Austria, Denmark, and Germany contribute to those countries’ enviably low unemployment rates.”

In many European countries, manufacturing continues to play an important economic and employment role, unlike the U.S. where job losses in this sector have been an important contributor to increasing inequality.

Europe’s business performance is also underappreciated by Americans, poses Guay. On the 2013 Fortune Global 500 list, more European companies were included than American ones. Guay credits this to European firms’ long-standing focus on overseas business opportunities.

“European companies tend to be more oriented outside their home markets than is the case for their U.S. counterparts (in terms of revenues, employees, and assets), and that has served them well in an increasingly globalized world,” writes Guay.

Europe is also taking a different approach to preparing its workforce for increased economic competition. Among those aged 25-34, six European countries have higher rates of tertiary education (university, technical, and vocational training) attainment than the U.S.

In addition, over the past 30 years, the U.S. tertiary education rate has increased by only 1.3 percentage points. Many European countries, on the other hand, have devised policies to significantly increase the skill levels of their citizens.

“To the extent that a better educated workforce is a key component to a more competitive economy in the future, U.S. policymakers and business executives should be concerned about the implications for American workers, and be examining the methods used by European countries to equip so many more of their citizens with higher education in just a generation or two,” writes Guay.

“Rather than ridicule Europe, perhaps we should try to better understand why parts of that region are doing well, and attempt to adapt those best practices at home.”

Finally, from the perspective of the international community on a political level, though the U.S. does many things well—particularly compared with the world as a  whole—European countries outperform the U.S. in some key areas.

According to Transparency International, eight European countries place higher on the scale of least corrupt nations. Thirteen European countries place higher than the U.S. on The Economist Democracy Index. And, the International Institute for Democracy and Electoral Assistance reports, the U.S. ties for second to last among the top 25 countries for “functioning of government and ties for last among the top 25 countries on “civil liberties” and “electoral process and pluralism.”

Guay concludes, “Rather than ridicule Europe, perhaps we should try to better understand why parts of that region are doing well, and attempt to adapt those best practices at home.”

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