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A competitive growth of a small midle-income country in the eurozone is far to be assured

  • Marjan Senjur

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    The dichotomy of the increasing diversity of eurozone member countries and the institutional “one-size-fits-all” setting has exposed the deficiencies of the institutional economic architecture of the eurozone in the financial and economic crisis of 2008–2010. It has particularly exposed the weaknesses of middle-income countries within this framework. Greece, Ireland, and Portugal are experiencing outright financial crises. This article’s thesis is that small middle-income countries (MICs) in the eurozone face two general macroeconomic problems: (1) there is inherent macroeconomic instability; and (2) there is a problem of “competitiveness and convergence.” Small MICs’ ability to grow and catch up is demand-based and largely export-driven. Price competitiveness is an important factor of competitive growth within the eurozone. A national fiscal policy is crucial to countries’ ability to form and implement national policies for economic stability and competitive growth, which would enable a durable, above-average growth rate. Calls for a fiscal union along with the monetary union may therefore backfire. Copyright Springer-Verlag 2012

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    File URL: http://hdl.handle.net/10.1007/s10368-012-0215-6
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    Article provided by Springer in its journal International Economics and Economic Policy.

    Volume (Year): 9 (2012)
    Issue (Month): 3 (September)
    Pages: 213-233

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    Handle: RePEc:kap:iecepo:v:9:y:2012:i:3:p:213-233
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