Shifting paths? The evolution of Southern European growth trajectories in the post-Eurozone crisis decade (2010–9)

This article traces the growth trajectories of Southern European economies (Greece, Italy, Portugal, and Spain) over the decade 2010–9. Drawing on Comparative Political Economy (CPE) literature, we derive three propositions regarding their growth profiles, performance in high value-added exports, and employment outcomes during this period. We then empirically assess these propositions using growth decompositions of adjusted aggregate demand as well as sectoral output and employment indicators. Our results show that Southern European economies share important similarities: export-led growth has been insufficient to boost aggregate growth, stimulate high value-added exports, reverse pro-cyclical employment declines, or create high-wage employment opportunities. At the same time, these economies have diverged in their sectoral growth profiles and overall growth performance. We consider the implications of these findings for potential growth-enhancing policies in the region. In this regard, boosting domestic demand appears to be a crucial precondition for sustainable growth across Southern Europe.