Between Scylla and Charybdis: long-term drivers of EU structural vulnerability

Dario Guarascio, Jelena Reljic, Giacomo Cucignatto, Annamaria Simonazzi and Giuseppe Celi

Review of Keynesian Economics, 2025, vol. 13, issue 1, 112-140

Abstract: This work investigates the European Union’s structural vulnerability in an increasingly polarised global economy with ever more ‘weaponised’ interdependencies. Europe’s structural vulnerability is due to different interlinked and mutually reinforcing elements, which are the legacy of a self-defeating export-led growth model and a related economic policy set-up. We define structural vulnerability along four main dimensions – demand, supply, technology and critical raw materials – and discuss its main drivers. Highlighting the key role that Germany plays in shaping the EU growth model, we argue that the vicious circle between demand repression and supply deterioration has constrained innovation and growth, particularly in the southern periphery, making Europe more fragile in the face of external shocks. While acknowledging the recent change in the EU’s industrial policy approach, we argue that inadequate coordination at the EU level and the lack of common resources leave it to the fiscal capacity of individual member states to bridge the technological gap, with the real risk of further widening the core–periphery gap and increasing the structural fragility of the Union.

Keywords: Structural vulnerability; Strategic autonomy; Industrial policy; Core–periphery (search for similar items in EconPapers)
JEL-codes: F02 F15 F45 F55 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/view/journals/roke/13/1/article-p112.xml
Restricted Access

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:rokejn:v:13:y:2025:i:1:p112-140

Access Statistics for this article

Review of Keynesian Economics is currently edited by Thomas Palley, Matías Vernengo and Esteban Pérez Caldentey

More articles in Review of Keynesian Economics from Edward Elgar Publishing
Bibliographic data for series maintained by Phillip Thompson ().