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Investment-led growth: a solution to the European crisis

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  • Cozzi, Giovanni
  • Griffith-Jones, Stephany

Abstract

In this chapter we argue that low investment is at the root of European stagnation, and that a sustained (and sustainable) recovery can only be investment-driven. Investment is necessary to cure insufficient demand and unemployment in the short run, but also to introduce innovative technologies and increase potential output in the long run. Moreover, only higher investment can reverse the disquieting trend of de-industrialization that can be observed throughout Europe. In this chapter we make specific proposals on how the EIB, the EU’s regional development bank, can significantly expand its lending to stimulate growth, investment and innovation, particularly in the countries that have suffered most during the sovereign debt crisis. This would help deal with the fragmentation of financial and banking markets, which has emerged in Europe since the crisis and has caused enterprises to be severely credit-rationed, particularly in the periphery of the continent.

Suggested Citation

  • Cozzi, Giovanni & Griffith-Jones, Stephany, 2016. "Investment-led growth: a solution to the European crisis," Greenwich Papers in Political Economy 14297, University of Greenwich, Greenwich Political Economy Research Centre.
    • Handle: RePEc:gpe:wpaper:14297
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    Cited by:

    1. Itaman, Richard E. & Awopegba, Oluwafemi E., 2021. "Finance, oil rent and premature deindustrialisation in Nigeria," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 149-161.
    2. Farah Roslan & Borhan Abdullah & Mohd Khairul Amri Kamarudin, 2023. "A panel data method towards the effectiveness of sources of finance in stimulating the realisation of renewable energy technologies: Empirical evidence for Asia‐Pacific," Australian Economic Papers, Wiley Blackwell, vol. 62(4), pages 693-722, December.
    3. Zeilbeck, Severin, 2015. "An investment initiative for fiscally constrained EU member states: The role of synergetic financial instruments," IPE Working Papers 58/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Strike Mbulawa, 2021. "Trade and Investment Led Growth in Southern African Development Community (SADC)," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 9(2), pages 79-88.
    5. Selim Jahan, 2017. "Human Development Report 2016 - Human Development for Everyone," Working Papers id:12021, eSocialSciences.
    6. Mazzucato, Mariana & Semieniuk, Gregor, 2018. "Financing renewable energy: Who is financing what and why it matters," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 8-22.
    7. Abiola John Asaleye & Charity Aremu & Adedoyin Isola Lawal & Adeyemi A. Ogundipe & Henry Inegbedion & Olabisi Popoola & Adewara Sunday & Olusegun Barnabas Obasaju, 2019. "Oil Price Shock and Macroeconomic Performance in Nigeria: Implication on Employment," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 451-457.

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