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These Little PIIGS Went to Market: Enterprise Policy and Divergent Recovery in European Periphery

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  • Samuel Brazys

    (School of Politics and International Relations and Geary Institute for Public Policy, University College Dublin)

  • Aidan Regan

    (School of Politics and International Relations, University College Dublin)

Abstract

The 2008 financial crisis hit few places harder than the European periphery. Faced with high levels of public debt, Portugal, Italy, Ireland, Greece and Spain (the PIIGS) were each compelled to implement harsh austerity reforms. Yet despite this common policy response, the recoveries, particularly in Ireland, have shown significant divergence. We challenge the prevailing narrative that Ireland’s export-led recovery from the crisis is due to austerity induced cost competitiveness. Instead, we argue that Ireland’s state-led enterprise policy situated the country to be a recipient of foreign direct investment driven by the low borrowing costs, brought on by the United States’ Quantitative Easing (QE) programs. Using quantitative and qualitative investigation we find evidence that this state-led enterprise policy mechanism, rather than austerity-induced cost competitiveness, kick started Ireland’s export growth engine. As Ireland is a critical case for the “success” story of austerity in Europe, our findings represent a significant challenge to the politics of adjustment in the Eurozone.

Suggested Citation

  • Samuel Brazys & Aidan Regan, 2016. "These Little PIIGS Went to Market: Enterprise Policy and Divergent Recovery in European Periphery," Working Papers 201517, Geary Institute, University College Dublin.
  • Handle: RePEc:ucd:wpaper:201517
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    File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201517.pdf
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    References listed on IDEAS

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    1. Olivier J. Blanchard & Daniel Leigh, 2013. "Growth Forecast Errors and Fiscal Multipliers," American Economic Review, American Economic Association, vol. 103(3), pages 117-120, May.
    2. Geraldine Robbins & Irvine Lapsley, 2014. "The success story of the Eurozone crisis? Ireland's austerity measures," Public Money & Management, Taylor & Francis Journals, vol. 34(2), pages 91-98, March.
    3. Samuel Rueckert Brazys, 2013. "Evidencing donor heterogeneity in Aid for Trade," Review of International Political Economy, Taylor & Francis Journals, vol. 20(4), pages 947-978, August.
    4. Hans-Werner Sinn, 2014. "Austerity, Growth and Inflation: Remarks on the Eurozone's Unresolved Competitiveness Problem," The World Economy, Wiley Blackwell, vol. 37(1), pages 1-13, January.
    5. Olivier J. Blanchard & Daniel Leigh, 2013. "Growth Forecast Errors and Fiscal Multipliers," American Economic Review, American Economic Association, vol. 103(3), pages 117-120, May.
    6. Blyth, Mark, 2013. "Austerity: The History of a Dangerous Idea," OUP Catalogue, Oxford University Press, number 9780199828302.
    7. Marco Buti & Nicolas Carnot, 2012. "The EMU Debt Crisis: Early Lessons and Reforms," Journal of Common Market Studies, Wiley Blackwell, vol. 50(6), pages 899-911, November.
    8. Samuel Brazys & Niamh Hardiman, 2013. "From Tiger to PIIGS: Ireland and the use of heuristics in comparative political economy," Working Papers 201316, Geary Institute, University College Dublin.
    9. Barry, Frank & Van Egeraat, Chris, 2008. "The Decline of the Computer Hardware Sector: How Ireland Adjusted," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2008(1-Spring), pages 38-57.
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    Cited by:

    1. Ala, Alessandro S. & Lapsley, Irvine, 2019. "Accounting for crime in the neoliberal world," The British Accounting Review, Elsevier, vol. 51(5).
    2. Niamh Hardiman & Spyros Blavoukos & Sebastian Dellepiane-Avellaneda & George Pagoulatos, 2016. "Austerity in the European periphery: the Irish experience," Working Papers 201604, Geary Institute, University College Dublin.

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    Keywords

    Austerity; Crisis; Debt; Ireland; PIIGS; Enterprise Policy;
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