Clusters and networks are crucial for the implementation of the Europe 2020 strategy of the EU, as reflected in the flagship initiatives "Innovation Union" and "An integrated industrial policy for the globalisation era". The European Commission has supported a range of research and joint learning efforts as well as set up specific advisory bodies. The present study adds an important new perspective, focusing specifically on the presence and role of firm networks and their potential to be leveraged as a tool or platform for EU programs to enhance competitiveness. It aims to inform the debate as to whether network-oriented policies are a substitute, complement, or instrument for/of cluster-based economic policies and to the role the European Commission can play in this context. It approaches this issue from a number of angles: First, the analysis of the network literature helps to identify the conceptual differences and complementarities between firm networks and clusters. Second, the analysis of the ECO database and the internet search provides insights into the empirical profile of firm networks. And third, the interviews with policy makers and network practitioners add perspective on how firm networks are currently leveraged in Europe. The research is financed by the Framework Contract of the European Competitiveness Reports (ECR) led by WIFO. It is conducted in cooperation with our partners from the Harvard Business School (HBS) and the Stockholm School of Economics (SSE).

The study is financed by the framework contract for the European Competitiveness Report and performed in cooperation with Idea Consult from Brussels, Ecorys from Rotterdam and the Institute for the World Economy of the Hungarian Academy of Sciences (VKI). The study takes a sectoral perspective and provides a detailed analysis of the fashion industries and its sub-industries, the structure, competitive position and key drivers of competitiveness, with a focus on quantitative data analysis. In terms of geographical coverage the focus is on the EU as a whole and its competitive position in a global context (i.e., vis-à-vis emerging international players, such as China or India).

The European Council of February 2011 endorsed "safe, secure, sustainable and affordable energy contributing to European competitiveness" as a priority. The prices of energy commodities, particularly oil, have risen sharply in the last decade. Rising energy price and volatility levels have a series of potential effects on businesses, production costs, economic activity or external accounts and competitiveness. An important related issue is to what extent the climate change concerns and the wide-spread and heterogeneous policy responses adopted by different countries (e.g., in the promotion of energy efficiency) can have significant impacts on overall production costs and competitiveness. A special case in this context is the formulation of low carbon targets and the phase-out of nuclear power as in the case of Germany. The overall aim of the study is to provide evidence and analysis on the impact on businesses and industry competitiveness of the EU. A special focus is put on the analysis of the position, performance and impacts per country and industrial sectors. The research is financed by the Framework Contract of the European Competitiveness Reports (ECR) led by WIFO. It is conducted in cooperation with our partner ZEW.

The ongoing globalisation has changed the economic landscape. Many products used to be produced locally by means of inputs from mainly the domestic economy. Technological development has facilitated the geographical fragmentation of production processes, resulting in the emergence of global value chains. Different parts of firms' production processes are now located in different parts of the world according to the comparative advantages of the locations, which has given rise to increased trade. A large share of this trade is intra-firm trade of intermediate goods conducted by multinational firms. The increasingly important role of global value chains for the EU industry is emphasised in the EU flagship initiative "An integrated industrial policy for the globalisation era". This study, which supports the initiative thorough empirical analysis in a number of areas, focuses on the following tasks: 1. background and literature review, 2. changes in industries' value chains over the last ten years, 3. effects of the economic crisis on changes in trade patterns and potential disruptions to international supply chains, 4. impact of long-term and crisis-related value chain dynamics on the competitiveness of EU firms and their internationalisation. The research is financed by the Framework Contract of the European Competitiveness Reports (ECR) led by WIFO. It is conducted in cooperation with our partners wiiw, AIT and RCERS HAS.

The European Union holds a strong position in global foreign direct investments (FDI), both with respect to inward and to outward FDI. However, the economic and financial crisis has been attended by pronounced declines in both intra-EU FDI flows as well as in the EU's outward FDI flows. This will force more European multinational firms (MNEs) to seek investment opportunities in fast growing emerging markets outside the EU, at the same time as the EU's FDI position is increasingly being challenged by the growing role of developing and emerging economies in the global economy. Likewise, the recent decrease in inward FDI raises the question of what are the main factors influencing the decision to invest in the EU countries and how to boost its attractiveness to investors from non-EU and EU countries. Investment incentives are justified by positive effects of entries and the presence of foreign affiliates on employment, productivity, wages and worker training and the existence of spillover effects to local firms. Likewise, outward FDI is seen as an important engine of economic growth at the same time as there are worries about its possible drawbacks, particularly where the effects of outward FDI on domestic labour markets are concerned. In order to better understand the determinants and impacts of inward and outward FDI in Europe, the study offers analyses of: 1. the factors that influence FDI flows, both location factors driving FDI inflows to the EU countries as well as the firm specific factors that account for the internationalisation of firms in turn; 2. the main trends and patterns of FDI flows at the aggregate, sector and firm level; 3. the direct and indirect effects of inward FDI on domestic firms and the host country in general; 4. the effects of outward FDI on the home country of MNEs.