Pathways from the Periphery? Growth Models and Path Dependent Development in the Context of European Integration

For several decades after WW2, Ireland, Spain, Portugal and Greece -- the ‘Cohesion Four’ -- seemed condemned to fulfil the expectations of many growth theorists that late arrival at the development party consigned countries to a path-dependent trajectory that would prevent them from achieving convergence  with their regional neighbours. However,  In all four cases, increasing integration into the EU altered the conditions under which growth prospects were framed. All four countries experienced considerable surges of convergence toward EU average growth rates in the context of economic liberalization and then EU membership. Yet all four found their growth models were severely damaged by the crises that emerged in 2008.

Although these four countries are commonly characterized as featuring different varieties of capitalism on which their growth potential is based (Ireland is an outlier as an LME where the others are generally view as MMEs), and their economies are on very different scales (Spain is much larger than the others and had experienced some successful regional industrialization in the 19^th century), they all shared common problems of late development.

The paper considers four related problems faced these countries:  how to mobilize investment capital from a low existing base; how to build  ‘inclusive institutions’ to support growth; how to restrain the development of severe distributive inequalities in the context of economic growth; and how to develop strategic capacity of the state itself. All four countries, to varying degrees retain features of unbalanced growth, weak coordinating capacities, inegalitarian social structures, and weak administrative capabilities.