Real Convergence as the Way to Heal the Eurozone
Real Convergence as the Way to Heal the Eurozone

Summary/Abstract: In attempting to elaborate a path to attain true convergence in the Eurozone, this article first analyses the mechanisms of convergence and the free market, and concludes that, contrary to what was expected, the free market principles have led to divergence in the Eurozone, with the northern countries as creditor states and southern countries as debtor states. The hindrance presented by the increasing costs of credit, higher in the South than in the North of the EU, has diminished the chances of the southern countries to compete in the Single Market. The current situation is undermining confidence in the hitherto-applied model of European integration, A deep diagnosis of the condition of the European Union is necessary in order to guarantee its survival. In fact, it is only through an active sectoral policy, implemented at both the level of the European Commission and the individual member countries, that the process of real convergence in the EU can be attained. Sectoral policy should be fine-tuned to the operation of market mechanisms in individual sectors of the economy in order to increase the employment rate, foster economy growth, foster specialisation and collaboration, and encourage greater equality. While it would not be easy to implement a proper sectoral policy within the present institutional system of the Economic and Monetary Union, this is crucial to the continuous development of the Eurozone. In this context, this paper favours a ‘semi-Keynesian’ interpretation, It is postulated to use financial instruments and support the countries suffering from the crisis in order to enable them to stimulate economic growth and create jobs. The problem is only going to be alleviated when the gaps between development levels are significantly diminished, structures of production are more assimilated, and intra-branch specialisation gains more importance. This is the ‘real convergence.

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