Economic Crisis and Structural Reforms in Southern Europe: Policy Lessons

The chapters of this book have covered the recent experience of southern European countries in dealing with structural reforms during their worst recession period since World War II. The different contributors have covered a wide range of issues in specific countries, from banking reforms in Cyprus (Clerides, Chapter 9), Greece and Portugal (Panagiotarea, Chapter 10) and Spain (Otero-Iglesias and Steinberg, Chapter 11), to labour market reforms in Spain (Cuerpo, Geli and Herrero, Chapter 7) and Portugal (Turrini, Chapter 6), to product market reforms in Greece (Petralias, Anastasatou and Katsikas, Chapter 8). Other authors have taken a multi-country perspective, discussing the effects of structural reforms on the functioning of the labour market (Aksoy and Manasse, Chapter 4) and on the current account (Catao, Chapter 5) and the political issues that arose during the reform effort (Terzi, Chapter 3). In the introduction to this volume we organized the discussion in two parts, one dealing with the issue of how to design an economically efficient reform programme and one concerned with the political economy of reforms. In trying to draw ‘lessons’ from the episodes covered in the book, we realize that these two ingredients are a convenient tool for expositional purposes, but are always found mixed up ‘in reality’. Reforms in the different markets were introduced in heterogeneous economic, political and institutional conditions, by governments of various degrees of commitment and competence and were implemented by administrations of different technical ability. While the basic ingredients of the policy prescriptions of international institutions were quite similar across countries, they were met by different degrees of resistance by public opinions and organized special interests. And yet we cannot escape two important questions. First, what conditions were conducive to relatively successful implementation of reforms and which were the most difficult obstacles to overcome? Second, what characteristics in their design and implementation improved or undermined their effects?