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A New Strategy for the European Periphery

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  • Karl Aiginger

Abstract

The southern European periphery suffered a severe setback in its catching-up process versus Western Europe after the financial crisis with GDP dropping by 10% between 2008 and 2012 and unemployment rates increasing to 20% for Greece, Portugal and Spain. We analyse first the reason for this setback, and then the policy reaction of the national governments and the European partners. Policy reactions mainly focused on restoring price competitiveness. It has important blind spots as far as industrial restructuring, upgrading tourism, making use of globalisation and alternative energies, supporting business starts, connecting education, as well as innovation and firm creation are concerned. There is a lack of national ownership of the reforms on the one hand, and a neglect of the European community and the surplus countries on the other hand, that they could support the southern periphery by measures increasing welfare in the community as well as in the surplus countries. Surplus countries profit heavily by the bifurcation of interest rates for government bonds and by capital flows.

Suggested Citation

  • Karl Aiginger, 2013. "A New Strategy for the European Periphery," WIFO Working Papers 443, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2013:i:443
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    References listed on IDEAS

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    1. Karl Aiginger & Susanne Sieber, 2006. "The Matrix Approach to Industrial Policy," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(5), pages 573-601.
    2. Karl Aiginger, 2011. "Why Growth Performance Differed across Countries in the Recent Crisis: the Impact of Pre-crisis Conditions," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 35-52, August.
    3. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    4. Karl Aiginger & Stefan Ederer & Olaf Cramme & Roger Liddle & Renaud Thillaye, 2012. "Reconciling the Short and the Long Run: Governance Reforms to Solve the Crisis and Beyond. WWWforEurope Policy Brief No. 1," WIFO Studies, WIFO, number 46058.
    5. Karl Aiginger & Alois Guger, 2014. "Stylized Facts on the Interaction between Income Distribution and the Great Recession," Research in Applied Economics, Macrothink Institute, vol. 6(3), pages 157-178, September.
    6. AIGINGER Karl, 2011. "Why Performance Differed Across Countries In The Recent Crisis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 55(2), pages 20-27.
    7. Karl Aiginger, 2007. "Industrial Policy: A Dying Breed or A Re-emerging Phoenix," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 297-323, December.
    8. Eve Chiapello & A. Hurand, 2011. "Contribution," Post-Print hal-00681170, HAL.
    9. Pierre-André Buigues & Khalid Sekkat, 2011. "Public Subsidies to Business: An International Comparison," Journal of Industry, Competition and Trade, Springer, vol. 11(1), pages 1-24, March.
    10. Karl Aiginger, 2007. "Industrial Policy: Past, Diversity, Future; Introduction to the Special Issue on the Future of Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 143-146, December.
    11. Karl Aiginger, 2012. "A Systemic Industrial Policy to Pave a New Growth Path for Europe," WIFO Working Papers 421, WIFO.
    12. Philippe Aghion & Julian Boulanger & Elie Cohen, 2011. "Rethinking industrial policy," Policy Briefs 566, Bruegel.
    13. Karl Aiginger & Peter Huber & Matthias Firgo, 2012. "Policy Options for the Development of Peripheral Regions and Countries of Europe. WWWforEurope Policy Brief No. 2," WIFO Studies, WIFO, number 46059.
    14. Karl Aiginger, 2006. "Competitiveness: From a Dangerous Obsession to a Welfare Creating Ability with Positive Externalities," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 161-177, June.
    15. Francisco Carballo-Cruz, 2011. "Causes and Consequences of the Spanish Economic Crisis: Why the Recovery is Taken so Long?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(3), pages 309-328, September.
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    Cited by:

    1. Karl Aiginger, 2016. "New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition – Part I: Synthesis. WWWforEurope Deliverable No. 11," WIFO Studies, WIFO, number 58791.
    2. Zeilbeck, Severin, 2015. "An investment initiative for fiscally constrained EU member states: The role of synergetic financial instruments," IPE Working Papers 58/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Jiri Mazurek, 2014. "Examination of European Union economic cohesion: A cluster analysis approach," Business and Economic Horizons (BEH), Prague Development Center, vol. 9(4), pages 8-17, January.
    4. Eckhard Hein & Daniel Detzer, 2014. "Coping with imbalances in the Euro area: Policy alternatives addressing divergences and disparities between member countries," Working papers wpaper63, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    5. Ludek Kouba & Michal Madr & Danuse Nerudova & Petr Rozmahel, 2016. "Policy Autonomy, Coordination or Harmonization in the Persistently Heterogeneous European Union?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 53-71, March.
    6. Karl Aiginger & Matthias Firgo, 2015. "Regional Competitiveness Under New Perspectives. WWWforEurope Policy Paper No. 26," WIFO Studies, WIFO, number 58501.
    7. repec:wsr:ecbook:2013:i:v-003 is not listed on IDEAS
    8. Luděk Kouba & Michal Mádr & Danuše Nerudová & Petr Rozmahel, 2015. "Policy Autonomy, Coordination or Harmonisation in the Persistently Heterogeneous European Union? WWWforEurope Working Paper No. 95," WIFO Studies, WIFO, number 58136.
    9. Mazurek Jiří, 2015. "A Comparison Of GDP Growth Of European Countries During 2008-2012 From The Regional And Other Perspectives / Porównanie Wzrostu Pkb W Okresie 2008-2012 W Krajach Europejskich Z Regionalnej I Innej Per," Comparative Economic Research, Sciendo, vol. 18(3), pages 5-18, August.

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