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Mario Monti, Italy's Prime Minister, previously was the EU's antitrust chief. Why does that matter? It means that he understands the ways in which regulation and corporate structure can-- and do-- impede competition both within and across European nations. He understands that the theory of the open European market has been realized only in part, and he understands how changes in law and regulation can permit and foster competition. He also believes that competitive markets are a key to economic growth, since that is one of the principal tenets of antitrust policy.

The Wall Street Journal of February 8 describes how Mr. Monti is arguing for market reforms both in Italy and in the EU as a whole. His new position as Italian PM gives prominence and platform to his views that his former positions did not provide.

I believe that Mr. Monti is of the view that I share-- that economic growth does not depend as much on loose or tight monetary and fiscal policies as on the structure of markets. Competitive markets provide opportunities for entrepreneurs to bring new ideas and new companies to market. As the work of the Kauffman Foundation has shown in the U.S., most new jobs are provided by new companies, not by old ones. For that reason, changing the European regulatory landscape from one that favors entrenched companies and unions to one that encourages entrepreneurship and competition should be the foundation of economic growth.

How quickly will Europe adopt such reforms? One is tempted to look at history and say something rude like "Lotsa luck!" But perhaps that is too pessimistic. Consider that almost everyone inside and outside Europe is concerned that the austerity policies being forced on or pursued by France, Italy, Spain Portugal, Ireland, Greece, etc. are self-defeating. The Germans also are worried that they are more and more on the hook for kicking the liquidity can down the road. Everyone is looking for ways to promote growth without loose fiscal policy. Maybe Mr. Monti can convince Europeans that the time for market reforms has come.

What would this mean for investors? I still am not willing to suggest that investing in European banks, or companies that achieve most of their revenue from Europe is the best idea. I think there are better opportunities elsewhere. Europe has a long way to go before I think it will achieve the kind of growth that makes corporate profits increase substantially. And that growth may not benefit many of the older, entrenched companies. But European growth would be good for the world economy. And that would benefit American, Asian and South American companies with good growth prospects, sound balance sheets, and nimble management.

Who are they? Apple (NASDAQ:AAPL) is an obvious choice. Google (NASDAQ:GOOG) is another. Is Cisco (NASDAQ:CSCO) now nimble enough? What about Wal-Mart (NYSE:WMT)? Despite its size, it continues to demonstrate a willingness to innovate and to pursue new markets in creative ways. A rising tide will float all boats substantially. Those that will float the highest are likely to be small companies that I know nothing about. Perhaps the best play would be a long-term investment in a small-cap ETF, such as Vanguard's small cap growth fund (NYSEARCA:VBK) or iShares similar fund (NYSEARCA:IWO). If you want to get rich quick, I am not the guy to listen to.

Source: Structural Reform Of Markets Is The Key To European Economic Growth