A competitive growth of a small midle-income country in the eurozone is far to be assured

Marjan Senjur ()

International Economics and Economic Policy, 2012, vol. 9, issue 3, 213-233

Abstract: The dichotomy of the increasing diversity of eurozone member countries and the institutional “one-size-fits-all” setting has exposed the deficiencies of the institutional economic architecture of the eurozone in the financial and economic crisis of 2008–2010. It has particularly exposed the weaknesses of middle-income countries within this framework. Greece, Ireland, and Portugal are experiencing outright financial crises. This article’s thesis is that small middle-income countries (MICs) in the eurozone face two general macroeconomic problems: (1) there is inherent macroeconomic instability; and (2) there is a problem of “competitiveness and convergence.” Small MICs’ ability to grow and catch up is demand-based and largely export-driven. Price competitiveness is an important factor of competitive growth within the eurozone. A national fiscal policy is crucial to countries’ ability to form and implement national policies for economic stability and competitive growth, which would enable a durable, above-average growth rate. Calls for a fiscal union along with the monetary union may therefore backfire. Copyright Springer-Verlag 2012

Keywords: European monetary union; Competitiveness and convergence; Growth policies; Slovenia; F5; O4; P1 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s10368-012-0215-6

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