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

Levy Economics Institute of Bard College Working Paper No. 794

39 Pages Posted: 5 Apr 2014 Last revised: 18 Apr 2014

See all articles by Alberto Botta

Alberto Botta

Mediterranean University of Reggio Calabria; University of Pavia

Date Written: March 3, 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 3, 2014). Levy Economics Institute of Bard College Working Paper No. 794, Available at SSRN: https://ssrn.com/abstract=2420168 or http://dx.doi.org/10.2139/ssrn.2420168

Alberto Botta (Contact Author)

Mediterranean University of Reggio Calabria ( email )

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

University of Pavia

Corso Strada Nuova, 65
27100 Pavia, 27100
Italy

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