Financialization and Deindustrialization in the European Periphery

A severe process of de-industrialization is taking place in many European countries and Southern Europe (SE) has been particularly hit after 2008. Moreover, contrary to Continental European countries, the fall of manufacturing production in SE is not compensated by the rise in high productivity services. The result is high unemployment and the diffusion of traditional services. As the European economy, particularly EMU, is increasingly connected by the same institutions, this asymmetric impact can be seen as a regional problem. In Hall (2014) this phenomenon is seen as the effect of a macroeconomic shock and of the subsequent austerity policies. Here we argue that, much in line with Reinert (2013), there is some deeper effect related to center-periphery dynamics ignited by the unification process. This dynamic is pushing Mediterranean countries to the periphery of the 'developed world' economic system. We draw the term 'periphery' from Wallerstein's (1979) argument that the world economy is structured according to center-periphery relations. Such relationships directly connect production and location processes along international commodity chains. Core activities are those that command a large share of total surplus, whilst peripheral activities only command a minor one. Consequently, surplus distribution is studied between nodes of a network rather than between factors of production. Furthermore, core activities tend to cluster in regions that are accordingly called 'central regions'. Institutional and political reasons, as well as locational advantages like positive externalities and qualified demand are responsible for clustering. On the other hand, semi-peripheral regions show a mixed picture.