In 2000, the European Union in Lisbon embarked on the road to become the world’s most competitive and knowledge-based economy by 2010 - capable of sustainable growth and creating more and better jobs. The Lisbon strategy called for structural reforms of the European economy in order to solve the gap in competitiveness between Europe and its competitors and to accommodate demographic development. However, a decade into the new millennium, the Lisbon strategy is still far from its goals. This thesis sets out to investigate why the European Union has not managed to close this gap and successfully impose structural reforms in the European economy. The overall proposition of the thesis is that the Lisbon strategy cannot address the problem of economic growth and competitiveness, because Lisbon deals with areas of more socio-economic character than traditional EU policies. Subsequently, national political priorities win at the expense of common economic goals, in other words, the Lisbon strategy entails a conflict of interests between the Community and the member states, which is blocking progress. By looking into the economic and rhetorical rationale behind Lisbon, the thesis sets out to examine if the gap between the competitors and Europe is as grave as it was laid out to be. In addition, the thesis examines whether or not the ‘toolbox’ and governance structure in Lisbon hold the potential to transform the European economies. In addition, the thesis researches on two specific summits, the launch of Lisbon in 2000 and the re-launch in 2005, to clarify if a conflict of interest between the national and Community level has constructed the Lisbon in such a way, that it has become hard to fulfil. The thesis finds that Europe’s problem prior to Lisbon is one of external as well as internal competitiveness gaps. From the outset of the toolbox, the Lisbon strategy has the potential to bring about a restructuring of the European economies as it entails policy areas that are relevant in the new knowledge economy. However, the construction and implementation phase of Lisbon clearly show a lack of leadership, not just by the national governments, but also by the European Commission. The thesis finds that when looking at the overall Lisbon process so far, there is a gap between Community and national interests. This is not only a problem for progress within Lisbon, but may also have consequences in relation to future European integration.