The European Journal of Comparative Economics

ISSN: 1824-2979

EJCE Year: 2017, June. Volume: 14 - Issue: 1

Out of the Crisis. A radical change of strategy for the Eurozone

by Andrea Ginzburg ; Annamaria Simonazzi

Start page: 13 - End page: 37

Keywords: Eurocrisis; Southern Europe; Germany, Competitiveness, Industrial Policy

Jel code: F15; O24; O25

DOI: 10.25428/1824-2979/201701-13-37


The paper argues that the crisis, mistakenly interpreted as a standard fiscal/balance of payments problem, was generated by the incomplete nature of the European institutions and a disregard for the consequences of differences in the stages of development of the member countries. The ideological pre-conception that markets are self-equilibrating through price competition has been used to justify disastrous internal devaluation policies in the belief that an austerity regime associated with institutions close to those assumed to prevail in 'core' countries would create the 'right' environment for resuming growth in the periphery. An analysis of the main phases of the development of European countries since the second post-war period provides evidence of wide differences in the productive structures of the countries of the centre and the southern periphery of Europe at the start of the Europeanization process. These differences entailed an asymmetric capacity of countries at differing levels of development to adjust to external shocks. This longer-term perspective helps us better to assess the limitations of the two alternatives that have been suggested to steer the EZ economy out of its present quagmire: internal devaluation (wage flexibility) in the deficit (Southern European) countries, or expansion of internal demand in 'core' countries (Germany). Both measures, it is argued, do not go to the root of the development and debt sustainability problems of Southern European countries, which continue to lack a sufficiently broad and differentiated productive structure. Given the differences in the levels of development of the various EU countries and their varying capacities to cope with change, fiscal policy should be assigned two complementary targets: the role of actively promoting — through investment —the removal of development bottlenecks and the renewal of the productive base, and a redistributive and compensative function. This new strategy entails the assignment of a strategic importance to investment guidance by the State through industrial policies geared to diversifying, innovating and strengthening the economic structures of peripheral countries. The paper concludes that this change of strategy is even more important today, since the crisis marks another important structural break in world trade, similar to those of the 1970s and the first decade of the new millennium.

View this article (PDF)

In case of problems please write an e-mail to

Publisher perpetually authorizes participants in the LOCKSS system to archive and restore EJCE articles through the LOCKSS System for the benefit of all LOCKSS System participants. EJCE is registered as OAI-PMH data provider. OAI - Records check.
EJCE, 2018-    : Registro stampa Trib. Busto Arsizio n. 7/18 del 13.07.2018; Direttore responsabile: Laura Ballestra, Università Carlo Cattaneo - LIUC Matteotti 22 20153 Castellanza VA
EJCE, 2004-2017: Supplemento a LIUC Papers, Registro stampa Trib. Busto Arsizio n. 11/93 del 11.06.1993; Direttore responsabile: Laura Ballestra, Università Carlo Cattaneo - LIUC Matteotti 22 20153 Castellanza VA