That could be due to the fact that the degree of rigidity of the economy would augment in practice under the economic “stress” of the much more rapid changes of their environment. The fact that total factor productivity, which is one of the proxies for the pace of structural transformation over years has dropped from 0.7% before 1995 down to 0.3% 4 after 1995 seems to give some credit to this conjecture. - Finally, let us not forget the demographic change occurring on both sides of the Atlantic. Indeed, Europe’s long term growth performance has also been constrained by the low rate of population growth and the ageing of its society. Since the mid 1990’s, population in the euro area has been growing at a yearly rate of just 0.4% compared to 1.1% in the US. However, what is worrisome is that at the same time, the gap in population growth has been even larger with regard to growth in the working age population the working age population grew on average by 0.3% per year in the euro area over the period 1996-2006 compared to 1.4% in the US , which manifests that Europe has a more acute problem of population ageing. The need for further structural reforms in Europe This brief assessment of the underlying causes of Europe’s relatively disappointing longerterm growth performance provides a mixed picture of the European economy.
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