For a credible growth strategy for the eurozone: the obligation to produce results

A

ny growth strategy for the eurozone is doomed to failure if there is no improvement in the functioning of the Economic and Monetary Union (EMU). The incomplete nature of the euro’s foundations became glaringly obvious during the most recent economic and fi nancial crisis. However, thanks to the theory of optimal monetary zones developed by R Mundell in 1961 we know how to make the eurozone function satisfactorily. It comprises the development of alternative adjustment mechanisms to the exchange rate, such as the increased mobility of production factors. Then governments and the European authorities will be able to concentrate on freeing the traditional engines of growth, i.e. investment, innovation and training to improve the growth trend. But the real challenge lies in the definition of an integrated cooperative economic policy which prevents the market share gains of some being systematically made at the expense of those made by others as is the case at present. The rebalancing of the Member countries’ current accounts, as it is being undertaken at present, cannot be considered a strategy for growth.