This paper evaluates claims that European productivity growth has been undermined by weak competition and excessive regulation and taxation. The argument has some validity in the context of the information and communications technology (ICT) revolution which has placed a greater premium on flexibility. The UK has been well-placed to benefit from ICT but experiences a productivity gap reflecting historically-low investment combined with high employment of low-productivity workers. Rapid Irish growth has benefited greatly from low corporate taxation but the massive contribution of ICT production to productivity growth suggests it is a special case not a role model.
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