A Pasinettian Structuralist analysis of the European Union’s core and peripheries

Pasinetti’s work can enrich Structuralist analyses of unequal international development between ‘cores’ and ‘peripheries’. We develop this argument with the study of the economic dynamics from 1995 to 2020 of the main national economies in the EU’s core and peripheries: Germany, France, Italy, Spain and Poland. First, we provide a methodological contribution: we operationalize Pasinetti’s formulation of a global economy including capital goods and connect it with Thirlwall’s Law and the capacity to stimulate domestic demand without running trade deficits. We also introduce a Pasinettian measure of import substitution and penetration in foreign markets and derive a vertically integrated trade balance. Second, we provide an account of European integration consistent with Structuralist analyses of economic growth. We find that the peripheral economies of Southern Europe have had to rely on a foreign-led recovery to improve their external positions after the Global Financial Crisis, forcing them into a state of semi-permanent austerity that postpones economic convergence to the EU’s core for the foreseeable future. In the Central-Eastern periphery, an apparently more successful convergence process also conceals a peripheral accumulation regime. We conclude that Structuralist and Keynesian developmental recipes are still valid to promote economic convergence in the European Union.