The Internal Competitiveness Divide: A Threat to the Integrity of the EU

The 28 member states of the EU, though forming a powerful economic block as a whole, perform rather diversely in terms of international competitiveness. In fact, the countries can be divided into two groups: a core characterised by structural competitiveness, and a periphery that is constrained to entering into and/or conducting (wage) cost competitiveness strategies. This situation, combined with the free movement of the factors of production (persons and capital) within the EU, poses huge challenges. In addition, a considerable part of the EU periphery, namely the Southern European Eurozone members, suffers from the lack of a sovereign monetary policy that could support national competitiveness-restoring policies in a sophisticated manner.

In our study, we first analyse the diversity of EU member states’ competitiveness. We aim at showing the complex trends of divergence and the internal competitiveness divide with mathematical methods. Once analysed, we try to identify the implications deriving from these tendencies. Our main conclusion is that the internal competitiveness divide, if not addressed by EU-level policies, may eventually even undermine the so far achievements of integration (especially the free movement rights and the common currency). So, this divide appears as a threat to the integrity of EU as a whole. Nevertheless, the situation should be constructively interpreted as a challenge that has to be faced and tackled. Indeed, the successful management of the discrepancies in competitiveness could strengthen post-crisis Europe’s stability and resilience.