Structural Asymmetries at the Roots of the Eurozone Crisis: What's New for Industrial Policy in the EU?

Levy Economics Institute, Working Papers Series No. 794

39 Pages Posted: 1 Apr 2014  

Alberto Botta

University of Greenwich; Mediterranean University of Reggio Calabria; University of Pavia - Faculty of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 31, 2014

Abstract

In this paper, we analyze and try to measure productive and technological asymmetries between central and peripheral economies in the eurozone. We assess the effects such asymmetries would likely bring about on center-periphery divergence/convergence patterns, and derive some implications as to the design of future industrial policy at the European level. We stress that future European Union (EU) industrial policy should be regionally focused and specifically target structural changes in the periphery as the main way to favor center-periphery convergence and avoid the reappearance of past external imbalances. To this end, a wide battery of industrial policy tools should be considered, ranging from subsidies and fiscal incentives to innovative firms, public financing of R & D efforts, sectoral policies, and public procurements for home-produced goods. All in all, future EU industrial policy should be much more interventionist than it currently is, and dispose of much larger funds with respect to the present setting in order to effectively pursue both short-run stabilization and long-run development goals.

Keywords: Center-Periphery Structural Symmetries, EU Industrial Policy

JEL Classification: E12, F15, O25, O52

Suggested Citation

Botta, Alberto, Structural Asymmetries at the Roots of the Eurozone Crisis: What's New for Industrial Policy in the EU? (March 31, 2014). Levy Economics Institute, Working Papers Series No. 794. Available at SSRN: https://ssrn.com/abstract=2418530 or http://dx.doi.org/10.2139/ssrn.2418530

Alberto Botta (Contact Author)

University of Greenwich ( email )

United Kingdom

Mediterranean University of Reggio Calabria ( email )

Via dei Bianchi, 2
Reggio Calabria, Reggio Calabria 89127
Italy

University of Pavia - Faculty of Economics ( email )

Corso Strada Nuova, 65
27100 Pavia
Italy

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