The Political Economy of Italy in the Euro: Between Credibility and Competitiveness (International Political Economy Series)

"This book proposes an alternative political economy framework in which to analyse the question of the credibility of international economic agreements, in general, and monetary arrangements in particular. The focus is on European monetary arrangements, from the establishment of the European Monetary System to the crisis of the Euro-zone. The analysis is predicated around the political economy of Italy's access and permanence in the Economic and Monetary Union (EMU). The author argues that the case of Italy, which made a concerted effort to join the EMU in the first wave, is particularly striking. Support for the single currency was widespread when it was introduced, yet something went wrong. Nowadays, its participation to the European monetary integration process cannot be easily taken for granted, especially after the vicissitudes of the Euro-zone crisis."-- Provided by publisher The Political Economy of Italy in the Euro 4 Contents 6 List of Figures 10 List of Tables 12 1 Introduction: Between Credibility and Competitiveness 14 Background and Research Question 14 The Theoretical Rationale 15 The Contents 18 References 21 2 Exchange Rate Agreements: A Socio-economic Understanding of Credibility 23 Introduction: Exchange Rate Arrangements as Foreign Economic Policy Agreements 23 The Credibility of Exchange Rate Regimes in IPE 26 A Structural Understanding of Civil Society and Power 30 The EMU as a New Constitutionalist Project 35 A Structural Approach to the Italian Position in the EMU 39 Mapping Socio-economic Interest Groups and Coalitions in Italy 46 Conclusion 47 Notes 48 References 49 Part I The Political Economy of the Euro and of the Crisis of the Eurozone 54 3 Competitiveness and EMU: The Three Phases of the Quest for Competitiveness 55 Introduction 55 Competitiveness: A Challenge for EMU from the Start 56 The Political Economy of Competitiveness 63 The First Stage of the Quest for Competitiveness: Competitive Devaluation of the Euro 65 The Second Phase of the Quest for Competitiveness: Structural Reforms 71 The Third and Failed Phase in the Quest of Competitiveness: The Establishment of a European Social Dialogue 73 Conclusion 78 Notes 79 References 82 4 The Crisis of the Eurozone as a Crisis of Competitiveness 86 Introduction 86 The Unfolding of the Crisis 87 The Fiscal Rationale of the Eurozone Crisis 89 The Global Financial Crisis and Asymmetric Shocks 91 The Eurozone Crisis as a Crisis of Competitiveness 95 Germany and the Problem, for the Others, of the ‘n – 1’ Country 100 The Reaction of EU Institutions to the Crisis: Between Austerity and the ECB as a Saver of Last Resort 109 Conclusion 116 Notes 117 References 120 Part II The Political Economy of Italy in the Euro 124 5 Consensus and Credibility: Italy and the Process of European Monetary Integration: A Closer Look at the ERM of the EMS 125 Introduction 125 Macroeconomic Imbalances at the Start of Monetary Integration 126 Labour Market Flexibility and Fiscal Restraint at the Time of Entry in the ERM 129 Socio-economic Interests and the Credibility of the Italian Commitment to the ERM 137 The Industrial Sector 139 The Public Sector 141 The Banking Sector 142 The Trade Unions 144 Conclusion 145 Notes 146 References 152 6 Italy and the Quest for Competitiveness: From the Crisis of the ERM to Entry in the EMU 157 The Impact of the ERM on Italy’s Industrial Sector: The Loss of Competitiveness as Seen by Confindustria 159 Italian Socio-economic Groups Changing Preferences on the Eve of the ERM Crisis 165 Regaining Competitiveness: The Impact of the Devaluation on the Italian Economy 175 At the Roots of Italian Monetary Credibility: A Widespread Socio-economic Consensus to EMU 180 Conclusion 190 Notes 190 References 193 7 Italy and the Loss of Credibility: The Crisis of the Eurozone 196 Introduction 196 Italy under attack 196 Internal Devaluation and Structural Imbalances in the EMU 200 Labour Market Flexibility Italian Style 202 The EMS as a Labor Market Straightjacket 207 EMU, Job Market Restructuring and the ‘Jobs Act’ 210 Conclusion 219 Notes 220 References 224 8 Italy and the Loss of Competitiveness: Between the Underground Economy and Migration 229 Quantifying the Underground Economy in Italy 230 Italy and Migration: Recent Dynamics 240 The Relation Between Irregular Migration and the Underground Economy and Its Implications for the Receiving Societies 245 Conclusion 261 Notes 263 References 264 Conclusion: Italy and the Euro: What Went Wrong? 267 Index 275 Front Matter....Pages i-xii Introduction: Between Credibility and Competitiveness....Pages 1-9 Exchange Rate Agreements: A Socio-economic Understanding of Credibility....Pages 11-41 Front Matter....Pages 43-43 Competitiveness and EMU: The Three Phases of the Quest for Competitiveness....Pages 45-75 The Crisis of the Eurozone as a Crisis of Competitiveness....Pages 77-114 Front Matter....Pages 115-115 Consensus and Credibility: Italy and the Process of European Monetary Integration: A Closer Look at the ERM of the EMS....Pages 117-148 Italy and the Quest for Competitiveness: From the Crisis of the ERM to Entry in the EMU....Pages 149-187 Italy and the Loss of Credibility: The Crisis of the Eurozone....Pages 189-221 Italy and the Loss of Competitiveness: Between the Underground Economy and Migration....Pages 223-260 Back Matter....Pages 261-278