Abstract:At the turn of the century, writings on globalization were rife with worry that transnational integration will strip states of the ability to direct industrial development. More recent literature suggests that industrial policy is alive and well, if thoroughly reshaped by the changes in the organisation as well as regulation of the economy. This paper contributes to this burgeoning body of research by examining the transformation of industrial policy toward automotive industry in Spain from the start of its in… Show more
“…This helps to explain why Southern European governments occasionally implemented measures contradicting the preferences of most domestic employers (Bulfone & Afonso 2020). Indeed, for Southern European economies, FDI attraction often involved joining the transnationally-distributed value chains controlled by foreign multinationals, in a dynamic common to many peripheral member states, such as Ireland and the Visegrad countries (Johnston & Regan 2018;Šćepanović 2019). Competition for FDI implies that large multinationals can choose between multiple investment outlets (Reurink & Garcia-Bernardo 2020), putting them in a structurally strong position vis-á-vis governments from prospective investment destinations.…”
Even when subject to comparable exogenous constraints during the Eurozone crisis and in its immediate aftermath, governments in Southern Europe have pursued distinct labour market reform agendas. What room for manoeuvre did governments of crisis-struck peripheral countries really have in shaping their labour market reform strategies, and how can we account for the observed variation? We address these questions by making a twofold contribution to the debate on the political economy of austerity in the Eurozone periphery. First, through the first systematic analysis of all labour market and collective bargaining (CB) reforms implemented in Portugal, Spain, Italy and Greece over 2009-2019, we identify those elements of core labour market deregulation common across Southern European countries (namely, the loosening of employment protection for workers on open-ended contracts and the decentralisation of CB to the firm level); and those elements of variation, both crosscountry and crossparty, in the content of corollary labour market interventions that accompanied this core deregulation. Second, we explain these similarities and variations in reform outcomes as the product of the interaction of two factors: economic constraints and electoral dynamics. We argue that the implementation of the common core of deregulation is linked to the exogenous pressure to improve export competitiveness to which Southern European countries have been subjected since the crisis. Through the combination of survey data analysis and qualitative evidence, we then show empirically how the variation in the corollary measures accompanying deregulation is linked to the class composition of the electoral social blocs Southern European partisan governments rely on or aim to assemble. Based on this analysis, we identify four ideal-typical labour market reformist strategies attempted by Southern European governments during the decade of the Great Recession. The analysis highlights that although domestic politics plays a crucial role in shaping structural adjustment under crisis conditions, not all reform strategies are equally viable within the framework of Economic and Monetary Union.
“…This helps to explain why Southern European governments occasionally implemented measures contradicting the preferences of most domestic employers (Bulfone & Afonso 2020). Indeed, for Southern European economies, FDI attraction often involved joining the transnationally-distributed value chains controlled by foreign multinationals, in a dynamic common to many peripheral member states, such as Ireland and the Visegrad countries (Johnston & Regan 2018;Šćepanović 2019). Competition for FDI implies that large multinationals can choose between multiple investment outlets (Reurink & Garcia-Bernardo 2020), putting them in a structurally strong position vis-á-vis governments from prospective investment destinations.…”
Even when subject to comparable exogenous constraints during the Eurozone crisis and in its immediate aftermath, governments in Southern Europe have pursued distinct labour market reform agendas. What room for manoeuvre did governments of crisis-struck peripheral countries really have in shaping their labour market reform strategies, and how can we account for the observed variation? We address these questions by making a twofold contribution to the debate on the political economy of austerity in the Eurozone periphery. First, through the first systematic analysis of all labour market and collective bargaining (CB) reforms implemented in Portugal, Spain, Italy and Greece over 2009-2019, we identify those elements of core labour market deregulation common across Southern European countries (namely, the loosening of employment protection for workers on open-ended contracts and the decentralisation of CB to the firm level); and those elements of variation, both crosscountry and crossparty, in the content of corollary labour market interventions that accompanied this core deregulation. Second, we explain these similarities and variations in reform outcomes as the product of the interaction of two factors: economic constraints and electoral dynamics. We argue that the implementation of the common core of deregulation is linked to the exogenous pressure to improve export competitiveness to which Southern European countries have been subjected since the crisis. Through the combination of survey data analysis and qualitative evidence, we then show empirically how the variation in the corollary measures accompanying deregulation is linked to the class composition of the electoral social blocs Southern European partisan governments rely on or aim to assemble. Based on this analysis, we identify four ideal-typical labour market reformist strategies attempted by Southern European governments during the decade of the Great Recession. The analysis highlights that although domestic politics plays a crucial role in shaping structural adjustment under crisis conditions, not all reform strategies are equally viable within the framework of Economic and Monetary Union.
“…These figures confirm that the Eastern growth models have become more industry-based and much more export competitive than the Southern ones. This is also why upgrading the Iberian industry has produced limited success so far (European Commission, 2020, Šćepanović, 2020). Figure 2.Developments in the industrial sector in the four countries relative to the EU-average.Note: EU average = 0.…”
Section: Challenges To Economic Upgrading and Post-crisis State Aid P...mentioning
Most foreign capital-led, export-oriented Eastern EU member states and the consumption-driven Southern European countries suffered a heavy blow during the Global Financial Crisis (GFC) in 2008–09. The GFC exposed the vulnerability of these economies to external shocks and raised the need for readjustment of their growth models through state intervention. While the rise of illiberal governments drove readjustment in the East, the main driver was externally fomented in the South. This article focuses on state aid, a particular instrument of industrial policy, which has been a main vehicle for growth model readjustment. We seek to explore whether the provision of state aid in the two European semi-peripheries contributes to long-term post-crisis recovery by promoting competitive investments in two Eastern (Hungary and Poland) and two Southern EU members (Portugal and Spain). Relying on the European Commission’s state aid database, we show that after 2013, in the consumption-driven South, governments aimed to strengthen supply through aid, while in the export-oriented East, they were more concerned about promoting exporting firms. The article thus reveals how state aid may preserve and reinforce existing growth models in the semi-periphery even if strategic aims and rhetoric target readjustment.
“…Winning and retaining comparative advantage in FDI attraction requires an effort of re-regulation, institution-building and economic diplomacy led by state actors, be they regional governments, city councils, unelected investment agencies, or NDBs (Bohle, 2018; Bohle and Regan, 2021; Brazys and Regan, 2017; Šćepanović, 2020). Hence, like in the case of national champions, industrial clusters are not the result of state retreat, deregulation, and cut-throat tax competition, but of a constant state involvement to fend-off competition from other potential destinations as well as to react to the structural changes affecting strategic industries.…”
Section: Open-market Industrial Policy and Its Main Featuresmentioning
The Great Recession renewed calls for a return of state activism in support of the European economy. The widespread nationalizations of ailing companies and the growing activism of national development banks led many to celebrate the re-appearance of industrial policy. Despite this reappraisal, however, comparative political economy (CPE) contributions to the study of industrial policy are still scarce. This review article critically overviews the existing literature linking CPE and industrial policy meeting three goals. First, to trace the evolution of the goals, protagonists, and policy instruments of industrial policy in the European Union (EU) since the post-war period. Second, to provide a periodization of the evolution of industrial policy based on the distinction between the inward-looking forms of state intervention prevalent until the late 1970s and the open-market industrial policy of later decades. Third, to outline future research pathways based on the integration between CPE, heterodox economics, and economic geography.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
