The global financial crisis shook the European economy, with the southern members struggling with the consequences of the debt crisis, and the post-socialist countries in Central and Eastern Europe finding themselves deprived of massive capital inflows, which were until then a significant driver of growth.
A decade later, the European economy is recovering from the shock caused by the pandemic, while simultaneously battling with the economic consequences of the war in Ukraine, and attempting to achieve both a successful digital transformation and a transition to a carbon-neutral economy. In this turbulent climate, the structural inequalities within the EU are becoming ever more evident. Continuously underestimating them means not only missing an opportunity for a renewed convergence but also increasing the risk of larger economic and political problems down the road in both of the EU peripheries.
The article is a follow-up to the FORCE Project conducted by the ENA Institute for Alternative Policies. Specifically, it addresses the concern that the 4th industrial revolution will have a different impact on EU members depending on their geographical position, strengthening the concentration of industrial and research activities in the richer states while deepening the inequalities between them and the countries on the periphery. The article goes further by arguing that there are two distinct peripheries within the European economy, each adapted in its own way to the dominant export-led growth model of the EU: the integrated periphery of Central and Eastern Europe (CEE) and the isolated Southern European (SE) periphery.
The article has two aims:
- Comparing and assessing the growth models of the two peripheral regions, with special focus on the two country cases (the Czech Republic and Greece).
- Showing the causes of their inability to achieve economic convergence with the core EU countries and to reap the benefits of the 4th industrial revolution. This lies in their dependency on the core, insufficient national growth strategies, and failure of the current mechanisms promoted by the EU as tools of convergence (such as the Recovery and Resilience Facility) to deliver an actual long-term development in the peripheries.
The article is organized as follows: the first part will discuss the dominance of the export-led growth strategy in the EU economy, and how the peripheral regions adapt to it. Key characteristics of the CEE and SE growth strategies will be introduced. The second part will be dedicated to an in-depth analysis of the Czech Republic and Greece, which serve to showcase the (in)ability of the peripheral countries to overcome their dependent position. The last part will use the example of the Recovery and Resilience Facility in the two countries to demonstrate that (for reasons both on the domestic and EU level) the mechanisms currently used by the EU to support convergence are in fact incapable of doing so since they do not affect the distribution of high value-added economic activities within the EU.
* Article by
Helena Drdlová, MSocSC, PhD student at the Faculty of Social Sciences at the University of Helsinki [[email protected]]