Growth models in Europe’s Eastern and Southern peripheries: between national and EU politics

Abstract

ABSTRACT This paper analyses the political origins of diverse peripheral growth models in Europe, focusing on debt-based consumption-led growth model in Southern Europe and FDI-based export-led growth model in Central and Eastern Europe. Contrary to existing approaches that attribute this East-South divergence to their geographic position and systemic features of European monetary integration, the paper argues that these growth models stem from different national and EU-level policy responses to the challenge of core-periphery market integration. While the Southern states sought to protect domestic firms, allowing for, or even directly contributing to deindustrialisation in the face of competition with the European core economies, Central and East European states aimed to preserve their industrial legacy even at the expense of FDI-dependency. These policy responses were, in turn, shaped by distinct patterns of interaction and accommodation between segments of state elites and domestic economic groups, as well as by dramatically different EU strategies of governing integration. In contrast with society-centred perspectives on the politics of growth models, the paper highlights the autonomous role of the state as a key actor balancing between the demands and accommodation of domestic economic groups, and the constraints and opportunities created by regional institutions governing market integration.