Buying Time: The Delayed Crisis of Democratic Capitalism by Wolfgang Streeck

Author:Wolfgang Streeck [Streeck, Wolfgang]
Language: eng
Format: azw3, epub, pdf
Publisher: Verso
Published: 2014-05-10T04:00:00+00:00

EXCURSUS ON REGIONAL GROWTH PROGRAMMES

Until the late 1990s, the EU directed considerable sums of financial aid into the Mediterranean countries that would go on to become today’s debtor states. Why did these flows not bring about sustainable economic growth? Technocratic talk of ‘cranking up’ economies that for one reason or another are lagging behind leaves out of account that growth requires not only institutional but also social–structural and cultural conditions, which are by no means universal and certainly cannot be generated by ministerial fiat. States and governments eager to promote growth in backward regions have repeatedly wagered on instruments such as help with start-up costs, wage subsidies, investment grants, special capital allowances, tax relief and public investment in local infrastructure. Such intervention always proved to be extremely expensive while its declared objectives were achieved only in the long run, if at all. Two telling examples are the Italian Mezzogiorno and the Neue Länder – the former German Democratic Republic – that acceded to West Germany in 1990.

As regards Italy, the central state and the European Community spent large sums during the postwar years on the economic development of the South, but failed to narrow the gap with the North in a sustainable way. Whereas per capita income in the Mezzogiorno61 was less than half the average for Italy at the beginning of the 1950s, the gap had closed to approximately 33 per cent (Fig. 3.9) by the time that postwar growth came to an end around 1970. It then rose again to just under 45 per cent by the mid-1990s, before declining slightly to 41 per cent around 2010.62

FIGURE 3.9. Italy: income gap and net transfers to Mezzogiorno, as percentage of national product, 1951–2008

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