Financialization and Deindustrialization in the Southern European Periphery

Historically, Southern European countries have shared a ‘semi-peripheral’ model of capitalism which has been characterized by fundamental fragilities in the production system. The financialization induced by the EMU has rendered these economies more fragile and unstable. Liberalization and market reform policies have taken southern economies onto the path of a credit-based and passively-extroverted financialized economy that trap them into a low-cost-of-wages search of competitiveness. However, the lack of autonomy in macroeconomic policies has weakened Southern opportunity to react to the financial crisis. The ‘internal devaluation’ policies that followed have caused a deep and thorough process of de-industrialization. This has sped-up the centralization of the European economy that has its centre in a narrow space within Paris, Amsterdam, Berlin and Frankfurt.