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

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  • Marjan Senjur

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Abstract

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

Suggested Citation

  • Marjan Senjur, 2012. "A competitive growth of a small midle-income country in the eurozone is far to be assured," International Economics and Economic Policy, Springer, vol. 9(3), pages 213-233, September.
  • Handle: RePEc:kap:iecepo:v:9:y:2012:i:3:p:213-233
    DOI: 10.1007/s10368-012-0215-6
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    References listed on IDEAS

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    More about this item

    Keywords

    European monetary union; Competitiveness and convergence; Growth policies; Slovenia; F5; O4; P1;

    JEL classification:

    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • P1 - Economic Systems - - Capitalist Systems

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