The Lisbon Agenda and the Relocation of Economic Activities Abroad The effects of international outsourcing and offshoring activities by European firms on their domestic labour markets are considerable. There is increasing evidence of at least short- and medium-term losses for low-skilled workers and the lower wage segments of the labour force. There are, however, by the same token major benefits to be derived, such as increased competitiveness of firms across Europe and the world, stronger economic growth resulting from increased continent-wide integration, political dividends as greater wealth in the CSEE result in greater political stability and a stronger democracy, and wealth gains for citizens as prices are kept lower than they otherwise would have been (due to increased competition and lower costs of production), also resulting in lower inflation. In order to meet these effects, reforms of labour markets are needed. With more flexible labour markets, displaced workers may more easily move to more competitive sectors. Clearly this represents a significant challenge for many European countries which are already coping with high unemployment. By the same token, social policies are needed to palliate the effects. If disadvantaged and displaced workers do not receive support it will be difficult to maintain a societal consensus on economic openness, which as we have seen is an important drive of economic growth. Liberalisation of trade in services, including through an increase in competition in the services sector within countries, could considerably raise economic growth and allow European citizens better value for money. It could be done either via WTO agreements, within the EU or by individual nations. Indeed, the OECD has found that countries that liberalise their services sector regardless of whether other countries do so show persistently higher economic growth. The potential benefits for all sides from a rise in global purchasing power are obvious. If the latter increases significantly, then everyone will be able to trade and invest more in an increasingly intertwined world economy. The biggest export market for the Italian car maker Ferrari is not the US or Italy, but China. We are back to where this paper began, namely the view that the relocation of economic activities- if pursued with due attention to the social and economic consequences resulting from it and closely monitored by the international community as a whole- is likely, as Europe's own experience with its economic integration has shown so clearly, to be“win-win” rather than“win­lose” or, even more pessimistically,“lose-lose”. Furthermore, FDI and international relocation can be important sources of lasting economic growth in recipient countries, provided they manage to create a favourable institutional framework, ensure good governance and encourage 165