Munich Economic Summit

At the 14th Munich Economic Summit, French Prime Minister Manuel Valls on Thursday sought to catch the attention of the more than 200 participants by highlighting his political roots in France's Socialist Party, which, as he claimed, wouldn't clash with a business-friendly agenda.

"To see a French socialist prime minister talk to heads of German companies seems to be surprising but to be together with the world of business is to act for economic growth in order to create employment," he told a conference packed with senior German and foreign business leaders and economic experts.

The event, organized by the BMW Foundation in collaboration with the renowned German Ifo economic institute, seemed just the right venue for the French government leader to promote his policy of economic reforms.

He lamented the negative image of the French economy that was circulating in British and American media. That image, he said, didn't quite align with reality. Valls underscored France's 0.6-percent growth in the first quarter, which was more than the output in any other country of the euro area.

Innovation laggards

The ability of European businesses to produce innovative products is at the center of the two-day conference in Munich - an issue, which Manuel Valls noted, was essential not only for the French economy but rather for all of Europe.

"We need the TGV [high-speed train] of the future, we need investment in renewables," he said, referring to key projects in French economic policy.

Hans-Werner Sinn, the head of the Ifo economic think tank, also underscored that without innovative products, European economies would continue to lag behind the impressive growth rates achieved by other nations around the world.

"Since the year 2000, China has grown 171 percent, while global economic output increased an average of 47 percent. The eurozone, by contrast, has expanded by only 28 percent in the period," he said.

Hopes and reality remained far apart, Sinn noted, in spite of the EU's Lisbon Agenda, signed in 2000 with a claim of turning Europe into the most competitive and dynamic economic region in the world. Instead, Europe continued to lag far behind, he said.

Showcase projects

Sinn also pointed out though that at least some of Europe's ambitious projects, such as the Airbus joint aerospace company and the Gallileo satellite system, had turned out to be economic success stories.

"Innovation is one of the keys to success," he said. "Innovation and growth are strongly correlated."

The conservative economist sees especially German industry on the cutting edge of innovation, supported by the government's Industry 4.0 initiative - an effort to promote the digitalization of industrial design and production.

At Volkswagen, for instance, there are just as many robots as employees working on the assembly line of its popular Golf model.

The increasing use of robotics in production will boost productivity and create more jobs, Sinn said. Small wonder then that 37 percent of all patents granted in Europe came from Germany.

Sinn believes that the three biggest economies after Germany - France, Italy and Spain - are still "lagging behind" in terms of innovation.

Reformers look ahead

In his speech to the conference, the vice president of the EU Commission, Valdis Dombrovskis, urged European leaders to focus their attention on the challenges ahead.

The former prime minister of Latvia noted that the future of Europe wasn't decided by the Greek debt crisis, but rather by Europe's ability to remain competitive in the face of global challenges.

"Stronger domestic investment will raise European competitiveness," Dombrovskis said, noting that more was needed to be done in the fields of research and development spending as well as in education.

That view was fully shared by Manuel Valls and Hans-Werner Sinn in their statements.