Economic and Financial Affairs

The LIME assessment framework (LAF) database

A hand above the keyboard of laptop computerLast update: 20/5/2009.


LAF is an analytical tool designed to help Member States identify policy measures to raise growth potential. This is part of the work that the LIME group, a sub-committee of the Economic Policy Committee (EPC) has undertaken to track, analyse and model structural reforms under the Lisbon process. The focus of this work has been on identifying practical policy tools.






LAF database in brief


  • developed by the European Commission working together with the LIME group;
  • the first, quantitative step in the broader LAF methodology;
  • systematically compares GDP performance (levels and change) of all EU Member States across 20 policy areas affecting growth relative to a benchmark;
  • based on an extensive survey of the economic literature, and
  • provides consistent and transparent statistical examination of key indicators - mostly structural indicators developed by Eurostat and the Employment Committee (EMCO).

Scope of LAF

The database contains all the quantitative scores of LAF for the 27 Member States, together with the underlying data and computations. It covers 12 GDP components and 20 policy areas affecting growth: ten areas concerning the labour market and demographic issues. Nine of these policy areas are especially relevant for labour productivity as they deal with product and capital markets plus innovation and knowledge; one policy area covers macroeconomic policies.

This gives a mechanical, indicator-based assessment of GDP and policy performance. It should be qualified by country-specific qualitative evidence from other sources (the second step in the LAF methodology).

Uses of LAF

  • identification of policy challenges relevant to raising growth potential;
  • strong>more in-depth studies on individual economies;
  • cross-country comparative analyses of structural reforms and the real side of the economy.

Limitations

LAF database is only one of the tools available to identify reform priorities. In addition to the usual caveats associated with growth accounting, there are significant data and theoretical limitations in several policy areas.

Moreover, while LAF has a broad coverage and captures the most important drivers of growth, it does not cover all areas and objectives falling under the Lisbon strategy for growth and jobs, and the Integrated Guidelines such as job quality, social inclusion and the environment.

Due to inevitable time lags, many indicators used in LAF may not reflect the impact of reforms recently adopted by Member States.

Information available - Last update: December 2008

Updated twice a year, LAF covers the 27 EU Member States (and, when available, some OECD and candidate countries) since 1999.
It records about 280 indicators and a very detailed GDP decomposition (growth accounting) exercise.

>> List of indicators

Database composition

User guide

The structure of the LAF database excel file is explained in the user guide.
The overview tables available in each excel file (labelled "output 1", "output 3" and "output 4") are a printer friendly version and easy to copy and paste into a Word document.

Papers and publications - suggested citation

When quoting, please include the link to LAF and the following reference:

The European Commission's Directorate-General for Economic and Financial Affairs and The Economic Policy Committee (2008) "The LIME assessment framework (LAF): A methodological tool to compare, in the context of the Lisbon Strategy, the performance of EU Member States in terms of GDP and in terms of twenty policy areas affecting growth". European Economy. Occasional Papers n°41. October 2008. Brussels.

This paper contains the literature survey explaining the choice of indicators.

"What explains the differences in income and labour utilisation and drives labour and economic growth in Europe?A GDP accounting perspective" European Economy. Economic Papers n° 354. January 2009. Brussels

This paper contains the detailed explanation of the GDP accounting.