ABSTRACT
This article critically examines the main assumptions underlying the reforms embedded in EMU and European Semester recommendations. We proceed in three steps. First, we question the notion that Italy and Germany embody two distinctive politico-economic models and challenge the conclusion, drawn from this assumption, that structural rigidities are the primary cause of Italy’s economic woes and that its lackluster performance since the 1990s is due to its insufficient determination to implement structural reforms. Rather we show, second, that both countries have undertaken remarkably similar reforms which, however, have yielded different results both because of the different public debt levels they started with and because the interdependence created by the euro and the hyper-financialised markets rewarded those countries with low, and penalises those with high, sovereign debt. Third, we contest the assumption that the two economies would converge towards a common growth path if only Italy could adapt to the requirements of a globalised economy like Germany has apparently done, which leads us, in conclusion, to question the appropriateness of the EU’s current strategy for both.
