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The political economy of the Eurozone crisis: competitiveness and financialization in PIIGS

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  • Duman, Özgün Sarımehmet

Abstract

This paper analyses the fundamental reasons for the current global economic crisis in the Eurozone and PIIGS—Portugal, Italy, Ireland, Greece and Spain. It evaluates the tight economic integration within the Eurozone, and scrutinizes the reasons that PIIGS were more intensely exposed to the economic crisis. It focuses on the structure of the real economy and the financial market, and outlines the levels of competitiveness and financialization across the Eurozone and PIIGS. The paper states that the reason for the economic crisis in PIIGS was not only (i) unregulated financialization or over-financialization, but also (ii) the economic and trade imbalance among the Eurozone members, (iii) the falling rates of profit in the real economy, and (iv) the failure of real profits to compensate financial profits.

Suggested Citation

  • Duman, Özgün Sarımehmet, 2017. "The political economy of the Eurozone crisis: competitiveness and financialization in PIIGS," LSE Research Online Documents on Economics 86386, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:86386
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    File URL: http://eprints.lse.ac.uk/86386/
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    More about this item

    Keywords

    competitiveness; economic crisis; Eurozone; financialisation; financial market; PIIGS; real economy;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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