Hungarian Yearbook of International Law and European Law

Article

Key Factors of the Development and Renewal of the Social Market Economy in the EU

Keywords Europe 2020 strategy, social market economy, eco-social market economy, social welfare systems, EU structural funds
Authors István Kőrösi
Author's information

364564 István Kőrösi
Associate professor, Pázmány Péter Catholic University, Budapest; senior research fellow, World Economic Institute of ERRC of the Hungarian Academy of Sciences.
  • Abstract

      The purpose of this study is to present the principles, strategy and operation of the social market economy, based on legal, political and economic considerations. The first social market economy, West Germany – followed by Austria, the Netherlands, as well as other countries in Northern and Western Europe –, mustered a positive overall performance from the post-World War II years to the early 1970s. Since then, however, we have been witnessing the erosion, distortion and decline of efficiency of the social market economy. There are four main issues to be addressed: (i) What are the main theoretical and conceptual, ‘eternal’ elements of the social market economy? (ii) What economic policy was built on this theoretical foundation and why did the system work well in Western Europe after World War II? (iii) What factors eroded this system? (iv) Can social market economy be renewed in the second decade of the 21st century and, if it can, what are the preconditions of it? In my analysis, I highlight some key areas: EU policies, Lisbon Agenda and Europe 2020 strategy, growth, financial disequilibria and competitiveness, innovation and employment, the relation of state and market.

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