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Fiscal Adjustment Programs versus Socially Sustainable Competitiveness in EU Countries

Cristian Socol (), Marius Marinas (), Aura Gabriela Socol () and Dan Armeanu ()
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Cristian Socol: Department of Finance, The Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania
Marius Marinas: Department of Finance, The Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania
Aura Gabriela Socol: Department of Finance, The Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania

Sustainability, 2018, vol. 10, issue 10, 1-17

Abstract: After implementing harsh austerity measures during 2008–2011, in the period 2012–2014 the fiscal adjustment programs also involved social equity measures, the quantitative fiscal consolidation being changed into a qualitative one—a reduction of the structural budget deficit accompanied by an improvement of social sustainability indicators. The 2015–2017 period shows mixed evolutions in terms of social progress brought by the recovery of the economic potential lost during the crisis. This research analyzes the sustainability of economic competitiveness dynamics from a social viewpoint during 2012–2014. In this paper, we analyze the way in which the economic and social components of fiscal adjustment programs are dynamically balanced in 24 EU member states. We identify four clusters of countries depending on the relationship between fiscal consolidation/fiscal stimulation and the social dynamics of the sustainability adjusted global competitiveness index. We found that under the pressure of “fiscal adjustment fatigue” caused by tough austerity programs in the period 2008–2011, most of the European countries completed the fiscal adjustment packages with measures to improve the social situation between 2012 and 2017. The fiscal consolidation programs have become more balanced from the perspective of the combination of budgetary austerity—social equity measures. Furthermore, we analyze how some countries on the EU periphery (Central and Eastern Europe, Baltic countries and Portugal, Ireland and Greece, countries that have joined the EU with a lower level of development) are experiencing or not an improvement in the social sustainability generated by the measures aimed at stimulating the economic growth implemented during 2012–2017. To conclude, we proposed a few pillars that could be integrated if an “ideal adjustment program” is to be achieved.

Keywords: economic competitiveness; social sustainability; fiscal adjustment Social Sustainability-adjusted Global Competitiveness Index; cluster analysis; discriminatory analysis (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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