Abstract
This chapter offers a historical analysis of the creation of the Eurozone, its institutional features and inefficiencies, the uneven economic development, and the rising structural and macroeconomic imbalances that made Eurozone vulnerable to the global financial crisis in 2008. It also analyses the political economy of the ‘intermediate’ economies and particularly of Greece and Portugal since the restoration of democracy in both countries in the mid-1970s. It emphasises on both supply-side characteristics especially on the weak industrial base and low added-value production and the demand-side aspects particularly on the fiscal policies and financialisation that led to the genesis of the ‘intermediate’ economies in Southern Europe. Finally, it shows that mechanisms that made Greece and Portugal vulnerable when the global financial crisis hit Europe.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
As the European Union was called until 1993.
References
Afonso, A., Dorigatti, L., Molina, O., & Tassinari, A. (2021). Labor Market (De)Regulation and Wage-Setting Institutions in Mediterranean Capitalism. In L. Burroni, E. Pavolini, & M. Regini (Eds.), Mediterranean Capitalism Revisited: One Model, Different Trajectories (pp. 115–148). Cornell University Press.
Alves, N., Centeno, M., & Novo, A. (2010). Investment in Education in Portugal: Returns and Heterogeneity (Economic Bulletin, 16:1). Banco de Portugal.
Andrews, D. M. (1993). The Global Origins of the Maastricht Treaty on EMU. In A. W. Cafruny & G. G. Rosenthal (Eds.), The State of the European Community (Vol. 2). Lynne Rienner.
Baldwin, R. (2006). In or Out? Does It Matter? An Evidence-Based Analysis of the Trade Effects of the Euro. Center for Economic Policy Research.
Baldwin, R., & Giavazzi, F. (Eds.). (2015). The Eurozone Crisis: A Consensus View of the Causes and a Few Possible Solutions. Centre for Economic Policy Research.
Baun, M. J. (1996). The Maastricht Treaty as High Politics: Germany, France, and European Integration. Political Science Quarterly, 110(4), 605–624.
Bayoumi, T., & Eichengreen, B. (1993). Shocking Aspects of European Monetary Union. In F. Torres & F. Giavazzi (Eds.), Adjustment and Growth in the European Monetary Union (pp. 193–229). Cambridge University Press.
Blanchard, O. (2007). Adjustment Within the Euro. The Difficult Case of Portugal. Portuguese Economic Journal, 6(1), 1–21.
Blyth, M. (2013). Austerity: The History of a Dangerous Idea. Oxford University Press.
Bulmer, S., Jeffery, C., & Paterson, W. E. (2000). Germany’s European Diplomacy: Shaping the Regional Milieu. Manchester University Press.
Capano, G., & Lippi, A. (2021). States’ Performance, Reforms, and Policy Capacity in Southern European Countries. In L. Burroni, E. Pavolini, & M. Regini (Eds.), Mediterranean Capitalism Revisited: One Model, Different Trajectories (pp. 42–56). Cornell University Press.
Collignon, S. (2004). Learning to Live in Euroland: The Role of France and Germany. Paper presented at ‘France and Germany in the International division of Labour’ conference, Paris.
Commission of the European Communities. (1990, October). One Market, One Money: An Evaluation of the Potential Benefits and Costs of Forming an Economic and Monetary Union (European Economy, 44). Commission of the European Communities.
Constitution of the Republic of Portugal. (1976). Constitution of the Portuguese Republic. http://hrlibrary.umn.edu/research/portugal-constitution.html
De Grauwe, P. (1997). The Economics of Monetary Integration. Oxford University Press.
De Grauwe, P. (2011). The Governance of a Fragile Eurozone (CEPS Working Document, 346). Centre for European Policy Studies.
Diamandouros, N. (1994). Cultural Dualism and Political Change in Post-authoritarian Greece (Estudio Working, 50). Centro de Estudios Avanzados en Ciencias Sociales, Istituto Juan March de Estudios e Investigaciones.
Dooley, N. (2018). Portugal’s Economic Crisis: Overheating Without Accelerating. In O. Parker & D. Tsarouhas (Eds.), Crisis in the Eurozone Periphery: The Political Economies of Greece, Spain, Ireland, and Portugal. SPERI. Palgrave Macmillan.
Dullien, S., & Guerot, U. (2012). The Long Shadow of Ordoliberalism: Germany’s Approach to the Euro Crisis (ECFR Policy Brief). European Council on Foreign Relations.
Dyson, K., & Featherstone, K. (1999). The Road to Maastricht: Negotiating Economic and Monetary Union. Oxford University Press.
Eichengreen, B. (2007). The Breakup of the Euro Area (NBER Working Paper, 13393). National Bureau of Economic Research.
Eurostat. Education and Training. https://ec.europa.eu/eurostat/web/education-and-training/data/database
Eurostat. Gross Domestic Expenditure on Research & Development. https://ec.europa.eu/eurostat/databrowser/view/sdg_09_10/default/table?lang=en
Eurostat. Real GDP Growth Rate. https://ec.europa.eu/Eurostat/databrowser/view/tec00115/default/table?lang=en
Featherstone, K. (2015). Greece: When Populism Fails. EUROPP-LSE Blog. https://blogs.lse.ac.uk/europpblog/2015/06/25/greece-when-populism-fails/
Fishman, R. M. (2011, April 14). Portugal’s Unnecessary Bailout. The New York Times. https://www.nytimes.com/2011/04/13/opinion/13fishman.html#:~:text=The%20bailout%20has%20empowered%20those,Times%2C%20all%20in%20one%20subscription
Friedman, M. (1960). A Program for Monetary Stability. Fordham University Press.
Friedman, M., & Schwartz, A. J. (1986). Has Government Any Role in Money? Journal of Monetary Economics, 17(1), 37–62.
Gabrisch, H., & Staehr, K. (2014). The Euro Plus Pact: Cost Competitiveness and External Capital Flows in the EU Countries (ECB Working Paper Series, 1650). European Central Bank.
Garrett, G. (1993). The Politics of Maastricht. Economics and Politics, 5(2), 105–123.
Giannitsis, T. (1988). Η ένταξη στην Ευρωπαϊκή Κοινότητα και οι επιπτώσεις στη βιομηχανία και στο εξωτερικό. Institute for Mediterranean Studies.
Hall, P. A. (2014). Varieties of Capitalism and the Euro Crisis. West European Politics, 37(6), 1223–1243.
Hopkin, J. (2015). The Troubled Southern Periphery: The Euro Experience in Italy and Spain. In M. Matthijs & M. Blyth (Eds.), The Future of the Euro (pp. 161–184). Oxford University Press.
Issing, O. (2008). The Birth of the Euro. Cambridge University Press.
Johnston, A., & Regan, A. (2016). European Monetary Integration and the Incompatibility of National Varieties of Capitalism. Journal of Common Market Studies, 54(2), 318–336.
Kalbaska, A., & Gatkowski, M. (2012). Eurozone Sovereign Contagion: Evidence from the CDS Market (2005–2010). Journal of Economic Behavior & Organisation, 83(3), 657–673.
Karamanlis, K. (1976, June 12). Speech at the Hellenic Parliament.
Kenen, P. (1969). Theory of Optimum Currency Areas: An Eclectic View. In R. Mundell & A. Swoboda (Eds.), Monetary Problems in the International Economy. University of Chicago Press.
Kenen, P. (1995). Economic and Monetary Union in Europe: Moving Beyond Maastricht. Cambridge University Press.
Ladi, S. (2014). Austerity Politics and Administrative Reform: The Eurozone Crisis and Its Impact upon Greek Public Administration. Comparative European Politics, 12(2), 184–208.
Lopes, J. C. (2012). High Employment Generating Sectors in Portugal: An Interindustry Approach. International Journal of Latest Trends in Finance and Economic Sciences, 2(2), 125–135.
McKinnon, R. (1963, September). Theory of Optimum Currency Area. American Economic Review, 4, 717–725.
McKinnon, R. (1995). Panel: One Money for How Many? In P. B. Kenen (Ed.), Understanding Interdependence: The Macroeconomics of the Open Economy. Princeton University Press.
McNamara, K. (1998). The Currency of Ideas: Monetary Politics in the European Union. Cornell University Press.
Minkkinen, P., & Patomaki, H. (Eds.). (1997). The Politics of Economic and Monetary Union. Kluwer.
Mourlon-Druol, E. (2012). A Europe Made of Money: The Emergence of the European Monetary System. Cornel University Press.
Mundell, R. (1961). A Theory of Optimum Currency Areas. American Economic Review, 51(4), 657–665.
Mundell, R. (1997). Updating the Agenda for Monetary Union. In M. I. Blejer, J. A. Frenkel, L. Leiderman, & A. Razin (Eds.), Optimal Currency Areas: New Analytical and Policy Developments (pp. 29–48). International Monetary Fund.
OECD. (2013). Portugal: Reforming the State to Promote Growth. OECD Publications.
Pagoulatos, G. (2000). Economic Adjustment and Financial Reform: Greece’s Europeanization and the Emergence of a Stabilization State. South European Society and Politics, 5(2), 191–214.
Pavolini, E., & Scalise, G. (2021). Following Different Paths of Modernisation. The Changing Sociocultural Basis of Southern Europe. In L. Burroni, E. Pavolini, & M. Regini (Eds.), Mediterranean Capitalism Revisited: One Model (pp. 91–111). Cornell University Press.
Pelagidis, T., & Mitsopoulos, M. (2014). Greece from Exit to Recovery? Brookings Institution Press.
Riley, D. (2012). Bernstein’s Heirs. New Left Review, 76, 136–150.
Sandbu, M. (2015). Europe’s Orphan: The Future of the Euro and the Politics of Debt. Princeton University Press.
Schelkle, W. (2013). Monetary Integration in Crisis: How Well Do Existing Theories Explain the Predicament of EMU? Transfer, 19(1), 37–48.
Spanou, C. (2015). Administrative Reform and Policy Conditionality in Greece. Administration and Public Employment Review.
Stiglitz, J. E. (2016). The Euro and Its Threat to the Future of Europe. Penguin-Random House.
Stockhammer, E. (2011). Peripheral Europe’s Debt and German Wages: The Role of Wage Policy in the Euro Area. International Journal of Public Policy, 7(1/2/3), 83–96.
Storm, S., & Naastepad, C. W. M. (2016). Myths, Mix-Ups and Mishandlings: Understanding the Eurozone Crisis. International Journal of Political Economy, 45, 46–71.
Streeck, W. (2016). Varieties of Varieties: VoC and the Growth Models. Politics & Society, 44(2), 243–247.
Talani, S. (Ed.). (2016). Europe in Crisis: A Structural Analysis. Palgrave Macmillan.
TFEU. (2012). Consolidated Version of the Treaty on the Functioning of the European Union. Official Journal of the European Union. https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12012E/TXT:en:PDF
Torres, F. (2008). The Long Road to EMU: The Economic and Political Reasoning Behind Maastrich. In S. Baroncelli, C. Spagnolo, & S. Talani (Eds.), Back to Maastricht. Obstacles to Constitutional Reform Within the EU Treaty (1991–2007) (pp. 196–220). Cambridge Scholars Publishers.
Voulgaris, Y. (2008). Η Ελλάδα από τη Μεταπολίτευση στην Παγκοσμιοποίηση. Polis.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2024 The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Myrodias, K. (2024). From the Birth of the Euro to the Eurozone Crisis: What Went Wrong?. In: The Political Economy of the Eurozone’s Rollercoaster. International Political Economy Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-42198-3_3
Download citation
DOI: https://doi.org/10.1007/978-3-031-42198-3_3
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-031-42197-6
Online ISBN: 978-3-031-42198-3
eBook Packages: Political Science and International StudiesPolitical Science and International Studies (R0)