Study-Unit Description

Study-Unit Description


TITLE The Role of SMEs and Competitiveness in the European Union

LEVEL 03 - Years 2, 3, 4 in Modular Undergraduate Course


DEPARTMENT European Studies

DESCRIPTION During the last few decades, globalization and the acceleration of digitization adoption as the result of the Covid-19 crisis have changed the context of EU competitiveness dramatically.

Recent developments such as the European Green Deal and the NextGeneration EU (NGEU) are an opportunity for the European Union to emerge stronger from the pandemic, transform Europe’s economies and create opportunities and jobs for the Europe where we want to live.

Over the past half-century, Silicon Valley in the US has been the hub for technological innovation which boasts a wealth of new and exciting startups, as well as tech giants such as Apple, Facebook, Google and Spotify. Unlike in the US, European SMEs are not the main engines of innovation and digitalisation. At the same time, European firms do appear to be investing more in their green transition than their peers in the US, and their lead in this area is likely to increase further (European Investment Bank, 2021). In this regard, the drive towards the digital world and its link to SMEs and entrepreneurship in the EU will be analyzed throughout the study-unit.

Study-Unit Aims:

The unit aims to make students appreciate the competitiveness challenges faced by the EU economy and its prime engines for EU growth, i.e. SMEs. The unit aims to explore the strategies adopted by the EU to improve the competitiveness of the European economy and its SMEs, to assess their effectiveness and to review specific strategies that the EU has in place for SMEs to foster growth and competitiveness. Every year, an entrepreneur is invited as a guest speaker, at one of the lectures, to provide an insight on entrepreneurship and share ideas with students to instil an entrepreneurial spirit.

A New Growth Model: The Triple Transition
It is clear that a triple transition of climate, digital and social change will dictate the EU’s overall strategy in coming years.

Academics and policy makers argue that successful implementation of the triple transition is the only way to sustain sufficiently high growth that is environmentally and socially sustainable. Green transition is inevitable in the medium term. The later it starts and the longer it lasts, the higher the economic and social costs will be. However, without sufficient progress on digitalisation, and more broadly on promoting innovation, the costs of a more ambitious agenda for green transition could make such transition socially, and thus ultimately politically, untenable.

In this regard, the EU would need to make the Green Deal and similar climate-centric efforts the centrepiece of its future strategy. It would need to adopt the right technologies to support these efforts, as well as the right social policies to ensure that no region or community is left behind. In short, it would have to bring about the triple transition.

The European Union has set ambitious and essential targets in achieving climate neutrality by 2050, already cutting greenhouse gas emissions by at least 55% by 2030. The 2030 Digital Compass paves the way for a digital Decade, requiring a swift acceleration of Europe’s digital transformation. The three new 2030 headline targets on employment, skills and poverty welcomed by the EU leaders at the Porto Social Summit and by the June 2021 European Council complement the political goals set for the green and digital transition and will guide European efforts towards a stronger social Europe.

Given the latest developments, this unit provides an overview of the European economy, the major economies and key structural challenges, particularly focusing on competitiveness issues. The use of supply-side polices to address competitiveness issues is highlighted.

The study-unit is divided into two sections:

1. Firstly, it will analyze developments in EU policy towards SMEs. Hence, it will give an overview in a chronological order of events/EU initiatives in favour of SMEs by mapping out the path from the European Charter for Small Enterprises to the Small Business Act for Europe. The role that SMEs have on the EU's agenda, particularly to Climate and Digital Agenda, will be addressed throughout the study-unit.

2. Secondly, it provides a review of the industrial and competitiveness policy of the EU. The development of this policy from the Lisbon Strategy to Europe 2020 is covered. Key results achieved to date are reviewed. Along with the Green deal, in May 2021, the Commission adopted an updated Communication on EU’s ‘New Industrial Strategy’ by setting out its plans in protecting the Single Market and promoting competitiveness, productivity and resilience in European industry.

The unit will also look into Next Generation EU (NGEU), which is a more than EUR 800 bn temporary recovery instrument of the EU, to be financed through joint borrowing on public financial markets. Its main element is a Recovery and Resilience Facility (RRF) which provides money to Member States in supporting reforms and investments in the Member States’ approved Recovery and Resilience Plans (RRPs) for 2021-2026. In this regard, the second part will look into the governance of the National Recovery and Resilience Plans (RRPs) and how they set out the reform and investment agenda of the Member States concerned. Reference will be made to Malta’s Recovery and Resilience Plan (RRP), which aims at strengthening the growth potential, job creation and economic and social resilience of Member States.

Learning Outcomes:

1. Knowledge & Understanding:
By the end of the study-unit the student will be able to:

- describe the main features of the European economy;
- list the main competitiveness issues faced by the European economy and EU SMEs;
- describe the main elements of Europe’s Growth strategy such as the Twin Transition (Climate and Digital);
- evaluate the achievements of Europe’s Growth strategies and identify any weaknesses;
- outline EU strategies for SMEs and assess whether such strategies are effective and whether EU SMEs have benefited from these actions at EU and national level;
- have an improved knowledge of the characteristics of the European economy and the EU's interests in aiding SMEs flourish as a means to boost its competitiveness worldwide;
- appreciate better the aims of Europe’s growth strategy such as Europe 2020 and the new Growth strategy and their application to EU SME policy;
- Compare Europe’s growth strategy with other markets such as US and Japan.

2. Skills:
By the end of the study-unit the student will be able to:

- apply basic economic concepts to the European economy;
- apply basic economic concepts to EU SME policy;
- apply the Linkage between Entrepreneurship, Competitiveness, Innovation and Economic Growth (theoretical approach);
- apply emerging concepts of climate and digital transitions to competitiveness.

Main Text/s and any supplementary readings:

Main Texts:

- Competitiveness and Economic Development in Europe, Prospects and Challenges Edited By Sławomir I. Bukowski, Alina Hyz, Marzanna B. Lament Copyright Year 2021, (Competitiveness and Economic Development in Europe: Prospects and Chal (
- El-Agraa, Ali (2007) 'The European Union Economics and Policies', Cambridge University Press, 8th Edition.
- Pelkmans, Jacques (2006) ' European Integration Methods and Economic Analysis', Pearson Education Limited, 3rd Edition.
- Artis, Mike & Nixson, Frederick (2007), 'The Economics of the European Union', Oxford University Press, 4th Edition.
- An SME Strategy for a sustainable and digital Europe; COM(2020) 103 final European Commission (2020), Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions, A New Industrial Strategy for Europe, COM(2020) 102 final.
- European Commission (2021), Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions, Updating the 2020 New Industrial Strategy: Building a stronger Single Market for Europe’s recovery, COM(2021) 350 final.
- Business Journey on the Single Market: Practical Obstacles and Barriers; {COM(2020) 93 final} Long term action plan for better implementation and enforcement of single market rules; COM(2020) 94 final Kalff, D. (2021), Enterprise Models and the EU Agenda, CEPS Policy Insights, PI2021-02.
- Kalff, D., A. Renda, W. P. De Groen, K. Lannoo, F. Simonelli, N. Iacob and J. Pelkmans (2019), Hidden Treasures. Mapping Europe’s Sources of Competitiveness Advantage in Doing Business, CEPS.
- Kotz, H. H., J. Mischke und S. Smit (2021), Pathways for productivity and growth after the COVID-19 crisis, VoxEU.

Additional reading material:

European Commission website
OECD publications
Publications by the International Monetary Fund
Publications by the European Commission's DG for Industry and Entrepreneurship.


Assessment Component/s Resit Availability Weighting
Examination (2 Hours) Yes 100%

LECTURER/S Ivan Carl Saliba

The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints.
Units not attracting a sufficient number of registrations may be withdrawn without notice.
It should be noted that all the information in the description above applies to study-units available during the academic year 2021/2. It may be subject to change in subsequent years.