Economic Transformation, Democratization and Integration Into the European Union

Economic Transformation, Democratization and Integration into the European Union Southern Europe in Comparative Perspective Edited by Heather D. Gibson gibson/93619/crc 11/12/00 11:07 am Page 1 Economic Transformation, Democratization and Integration into the European Union gibson/93619/crc 11/12/00 11:07 am Page 2 Also by Heather D. Gibson THE EUROCURRENCY MARKETS, DOMESTIC FINANCIAL POLICY AND INTERNATIONAL INSTABILITY ECONOMIC INTEGRATION AND FINANCIAL LIBERALIZATION: Prospects for Southern Europe (co-editor) INTERNATIONAL FINANCE: Exchange Rates and Financial Flows in the International System Sponsored by the Subcommittee of the Nature and Consequences of Democracy in the New Southern Europe of the Joint Committee on Western Europe (1975–96) of the American Council of Learned Societies and the Social Science Research Council. gibson/93619/crc 11/12/00 11:07 am Page 3 Economic Transformation, Democratization and Integration into the European Union Southern Europe in Comparative Perspective Edited by Heather D. Gibson Senior Economist Bank of Greece Athens gibson/93619/crc 11/12/00 11:07 am Page 4 Selection, editorial matter, Chapters 1 and 10 © Heather D. Gibson 2001 Chapter 8 © Heather D. Gibson with Yiannis Stournaras and Euclid Tsakalotos 2001 Other chapters © Palgrave Publishers Ltd 2001 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2001 by PALGRAVE Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N. Y. 10010 Companies and representatives throughout the world PALGRAVE is the new global academic imprint of St. Martin’s Press LLC Scholarly and Reference Division and Palgrave Publishers Ltd (formerly Macmillan Press Ltd). ISBN 0–333–80122–9 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Economic transformation, democratization and integration into the European Union : southern Europe in comparative perspective / edited by Heather D. Gibson. p. cm. Includes bibliographical references and index. ISBN 0–333–80122–9 1. Europe, Southern—Economic conditions. 2. Europe, Southern– –Economic policy. 3. Europe, Southern—Economic integration. 4. Europe, Southern—Politics and government. 5. European Union– –Europe, Southern. I. Gibson, Heather D., 1961– HC244.5 .E523 2000 330.94—dc21 00–055687 10987654321 10 09 08 07 06 05 04 03 02 01 Printed in Great Britain by Antony Rowe Ltd, Chippenham, Wiltshire In memory of Vincent Wright Scholar, mentor and Mensch Contents List of Tables x List of Figures xiii Preface xiv Acknowledgements xix List of Contributors xx 1 Economic Change in Southern Europe: Prospects for Convergence 1 Heather D. Gibson SEEs and the world economy 3 Catch-up and convergence: a framework for understanding the evolution of economies 8 Notes 25 Bibliography 27 2 Economic Change and the Process of Democratization in Southern Europe 30 Massimo Roccas and Tommaso Padoa-Schioppa Comparing Italy with Spain, Portugal and Greece 30 Differences between Spain, Portugal and Greece 34 Economic change in Italy, 1951 to 1979 36 Economic change in Spain, Portugal and Greece, 1960 to 1992 45 Conclusions 62 Notes 69 Bibliography 71 3 The Internationalization of Southern European Economies 75 Louka T. Katseli Introduction: The Southern European model in perspective 75 The internationalization of Southern European economies: globalization, regionalization and European integration 79 Trade and financial market liberalization 86 vii viii Contents The importance of Community funds and foreign investment in structural adjustment and the role of macroeconomic policy 98 The role of foreign direct investment in the integration process 104 Convergence and divergence in the internationalization process of SEEs: a challenge for social cohesion and democratic consolidation 113 Notes 116 Bibliography 117 4 Tourism as an Agent of Economic Transformation in Southern Europe 119 Allan M. Williams Introduction: a neglected economic sector 119 International tourism demand and potential income 122 Tourism and income flows 128 External income leakages and dependency 133 Employment and labour markets 135 Conclusion: tourism development, policies and politics 140 Bibliography 145 5 Labour Market Segmentation and Informal Work 149 Enzo Mingione Structuration of the social division of labour within the Southern European variants of industrial development 149 Origins and causes of the Southern European social division of labour model 154 Features of segmentation and the social division of labour 170 Conclusion 183 Notes 184 Bibliography 187 6 Industrial Policy for Southern Europe 193 Antigone Lyberaki New trends in the economies, the societies and the conception of industrial policy 197 Industrial policy in the European Union 205 European policies in favour of small and medium enterprises 210 Assessment and conclusions 215 Notes 221 Bibliography 226 Contents ix 7 The Comparative Politics of Industrial Privatization: Spain, Portugal and Greece in a European Perspective 231 Vincent Wright and George Pagoulatos Convergent pressures 232 The public sector 237 The privatization environment: the determining factors 242 Ambitions, programmes and outcomes 255 Concluding remarks 262 Appendix: Major privatizations 266 Notes 270 Bibliography 270 8 The Changing Role of Finance in Southern European Economies: Will There be an Improvement in Economic Performance? 274 Heather D. Gibson, Yiannis Stournaras and Euclid Tsakalotos The financial sectors in Southern European economies 275 The rationale for domestic and external liberalization 283 Prospects for the future 286 Conclusions 299 Appendix 300 Notes 301 Bibliography 303 9 The Community’s Redistributive and Development Role and the Southern European Countries 306 Achilleas Mitsos Theoretical foundations for strengthening economic and social cohesion 308 The Single Act and the reform of the Community’s structural policy 311 Assessment of the first period 316 The Maastricht era 321 The cohesion dimension of overall Community policy 324 Concluding remarks 330 Appendix: statistical tables 331 Notes 333 Bibliography 336 10 Concluding Remarks 343 Heather D. Gibson Notes 354 Bibliography 354 Index 355 List of Tables Table 1.1 The Golden Age and its decline 3 Table 1.2 Unemployment and inflation experience in OECD countries 4 Table 1.3 World trade 5 Table 2.1 Italian economic indicators (average annual compounded rates) 38 Table 2.2 Structure of Southern European economies 47 Table 2.3 Evolution of economic indicators 49 Table 2.4 Evolution of economic indicators 51 Table 3.1 Macroeconomic developments 76 Table 3.2 Economic adjustment 77 Table 3.3 Intra-Community trade and business arrangements 83 Table 3.4 Share of top five firms in total value added of each 84 Table 3.5 Trade balances 90 Table 3.6 Share of intra-industry trade in intra-EC trade 94 Table 3.7 Sectoral evolution of competitiveness 97 Table 3.8 Distribution of structural funds: initiatives in favour of Objective 1 countries 100 Table 3.9 Percentage distribution of Objective 1 funds by initiative under the first Community support framework (1989–93) 101 Table 3.10 Net fiscal transfers between member-states and the Community 102 Table 3.11 Percentage distribution of Objective 1 funds by initiative under the second Community support framework (1994–99) 103 Table 3.12 Distribution of FDI inflows across Southern European countries 105 Table 3.13 The catching-up process in the Community 109 Table 3.14 Economic policy indicators 110 Table 3.15 Real effective exchange rates 111 Table 4.1 International tourism arrivals, 1977–91 124 Table 4.2 Market segmentation, 1976–91 126 Table 4.3 International tourist receipts and expenditure, 1977–91 129 Table 4.4 Average tourism expenditure per foreign visitor, 1977–91 130 x List of Tables xi Table 4.5 Travel account receipts and the national economy, 1976–90 131 Table 4.6 The impacts of different forms of tourism on labour migration 138 Table 5.1 Principal indicators of employment in Southern Europe, 1994 171 Table 7.1 Major companies under the Instituto Nacional de Industria 238 Table 7.2 The importance of the state-owned company in Spain and Europe 239 Table 7.3 Public enterprises in Greece in the beginning of the 1990s 240 Table 7.4 Non-financial public enterprises in the Portuguese economy, 1977–86 241 Table 7.5 Public enterprises in Southern Europe 242 Table 7.6 Greek privatization programme, 1991 259 Table 7.7 Major privatizations in Spain (1985–97) 266 Table 7.8 Major privatizations in Portugal (1989–97) 268 Table 7.9 Major privatizations in Greece (1990–98) 269 Table 8.1 Characteristics of Southern European financial systems (pre-liberalization) 275 Table 8.2 Concentration levels in Southern European banking 277 Table

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