The Lisbon Strategy in the Wider European Context effects and even accelerate the trends. The EU is thus entering a new era, quite different from what Europe has experienced so far( Zgajewski). Globalisation itself is still a challenge bearing in mind the pressure of growing competition not only from industrialised, but also from developing countries. Initially, the key challenge of the Lisbon Strategy was to catch up with EU competitors such as the US and Japan. However, the real(nowadays perhaps even more important) challenges are fast-growing competitors like China, moving quickly from imitating to inventing, and India, developing its services sector efficiently. Emerging developing economies are not only competing through lower costs but also through steadily increasing research and innovation capacities. It became clear that the emerging“new” Asian growth dynamics were overlooked in the global update of the Lisbon Strategy, which initially focused on the competition between the traditional triad(US-EU-Japan), while restructuring the“new international division of labour” was to a great extent underestimated. These new competitors are becoming more and more important and“weigh” more in the longer run, while the technological and innovation gap remains a cause of concern with the US, as well. Furthermore, Europe is facing other challenges of the modern global economy, particularly the constant and accelerating change- not only in technologies, but in markets, social conditions and business models. Therefore the Lisbon Strategy needs to act as the basis for reaching ambitious objectives through innovation strategy and by investing in the knowledge society. It needs to further the progress of the European internal market( Randzio-Plath). Even the areas where Europe has been better performing, reforms were need, including the European social model. The social dimension of Europe was seen as fundamental for citizens, and comprehensive and integrated social and market reforms were needed to create a Europe of excellence. The link between the employment rate, social inclusion and the sustainability of the European model is one of the elements of the Lisbon objectives intended to achieve higher employment rates. The northern flexicurity model, as a mix of flexibility and social security, combining job security, an active labour market, social policies and the skills needed for a knowledge economy, is a case of good practice, bearing in mind the fact that social protection must be given high importance. It is a policy strategy aiming to enhance flexibility of labour markets, work organisation and social security. However, this area needs to be further addressed in the National Reform Programmes of member states. The social dimension of the Lisbon Strategy, even if somewhat virtual, is seen as a blueprint for the future. 11