The Challenge of ‘Shared Growth’ in the European Periphery

Electoral politics across Europe is under a great deal of pressure in the wake of the crisis, and especially in countries worst hit by the financial crisis. Party systems have fragmented across the European periphery, benefiting the far right in East Central Europe, but smaller left groupings on the western and southern periphery. Many commentators, inspired by Polanyi, point to growing problems of constrained state capacity which mean that strategies of compensation for those who are under most pressure from market exposure, and most reliant on strong public sector provisions, are under pressure.

EU-led fiscal retrenchment under the terms of the Fiscal Compact may be very relevant in accounting for these trends in the Eurozone. But domestic political choices with inegalitarian distributive consequences are a familiar sight too (as commentators on the Brexit vote have noted). Responses to globalization and shifts in the composition of economic activity, in other words, are filtered through a domestic political economy that has deeper structural features.

Not all of the relevant variation is captured by ‘varieties of capitalism’. This paper suggests that a core-periphery perspective can help us understand some of the challenges experienced in periphery countries in generating strategies of ‘shared growth’, due to the distinctive features of their insertion into global markets, and the constrained choices available to them to combine growth policies with welfare state expansion. Contemporary dilemmas are set in a longer-term perspective, to shed light on the comparative experiences of Ireland, Spain, Portugal, and Greece.