In part because of global competition, the EU is under pressure to become more flexible, loosen its bureaucratic entanglements and reform the welfare state. At the same time, market fundamentalism is on the retreat, and there is a strong impetus to bring social and environmental concerns into mainstream policy making. Meanwhile, failures in financial and other markets during the past decade have fueled a demand for more effective regulations. It is not becoming any easier to balance these contradictory forces. One key to doing so lies in education policy. Placing more emphasis on such subjects as engineering, math, physics and computer science would help build a competitive edge based on technological advances, higher value-added products and services. Attaining such an edge would relieve some of the pressures pushing against the European social model.

The world needs a better (more effective) international institutional architecture, which should deal with global challenges and take care of global commons.

The United States and the EU have a key role to play – whether one refers to reinventing the IMF and the World Bank, enhancing the role of the emerging economic giants into the running of IFIs, and not least, in reversing the tendency of erosion of multilateralism of recent years. In this context repairing the transatlantic relationship is urgent in view of the challenges ahead. To paraphrase former US Secretary of State, Madeleine Albright, this is to be seen as an indispensable relationship.

The evolving global economy, the rise of Asia, bring with them new major competitors and a change of competitive hierarchies. Countries which have skilled people, which invest in education and have forward-looking public policies, are more likely to enjoy the fruits of the global dissemination of technology. The talk about a knowledge-based economy is not a temporary fad.