Towards a European Division of Labour: Do Europe's Crises Highlight Structural Challenges to Sustainable Economic Growth in the Euro Zone?

Abstract

The financial and economic crises of the last few years in many Southern Euro zone countries are generally studied irrespective of each other. In this research note, we argue however that they may also be approached as symptoms of an underlying structural challenge facing the EU economy. In many ways the relationship between northern and southern Euro zone countries seems remarkably similar to the typical economic centre-periphery relations, yet without the harmonizing role a national government could play. The occurrence and combination of crises seems to be indicative of what one would expect from the adverse affects of centre-periphery relations among countries. Unfortunately, this would imply that the crises we are currently seeing are likely to continuously reoccur in the near future to the detriment of sustainable economic growth and political-economic stability in Europe.

Keywords: Financial crisis, EU, centre-periphery, economic growth, political, economic, stability, Europe