A widely-held view, both here and abroad, is that the economic dominance of the United States will cast a long shadow over Europe in the new millennium. But this judgment may well be wrong, essentially for two reasons. The first is that the long technology-driven US expansion has created the potential for a sustained European "catch up" phase reminiscent of the early postwar period. Massive two-way investment flows are already driving a vast west-to-east flow of innovation.
The second reason is that European economies are rapidly - and increasingly visibly - shedding their clubby, statist past. The word "capitalism" remains decidedly politically incorrect in many quarters, but its practice is clearly taking hold.
In Britain, for example, decades of "stop-go" policies and performance have come to an end. Building on Thatcherite reforms, Tony Blair's New Labour has de-linked monetary policy from electoral politics, embraced the notion that wealth creation is a private sector responsibility and set about the task of equipping the workforce with 21st century incentives and skills.
Elsewhere, the left in power has adopted similar attitudes. The heavy hand of the French state is quietly being lifted from the economy. In Germany, after a shaky start, the government of Gerhard Schröder is tackling some of the economy's thorniest problems, including a tax regime that penalizes initiative and a system of cross shareholding that shields enterprises from competitive forces.
In Italy, where the government undertook a draconian reform of public finances in order to become a founding member of the euro, a wave of mergers and acquisitions is injecting new vitality into the corporate sector. Spain has dramatically reduced unemployment and injected new dynamism into its economy.
Among the smaller European Union members, Ireland is riding the crest of a sustained boom. And the Netherlands, while showing some signs of reform fatigue, continues to perform in an outstanding manner.
To be sure, problems remain. Examples include France's difficulty in putting youth and the long-term unemployed to work; Germany's problem in integrating the eastern Länder; and the persistent north-south divide in Italy. But weighing these specific difficulties against the powerful forces at work to generate sustained growth, Europe's upside potential is impressive.
Note, though, that this upbeat assessment does not readily translate to other spheres. It remains to be seen whether the military weaknesses revealed in Kosovo will be remedied by contemplated reforms. And, perhaps regrettably, no antidote to the dominance of American mass culture appears to be at hand or in the offing.
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