From the Birth of the Euro to the Eurozone Crisis: What Went Wrong?

This chapter offers a historical analysis of the creation of the Eurozone, its institutional features and inefficiencies, the uneven economic development, and the rising structural and macroeconomic imbalances that made Eurozone vulnerable to the global financial crisis in 2008. It also analyses the political economy of the ‘intermediate’ economies and particularly of Greece and Portugal since the restoration of democracy in both countries in the mid-1970s. It emphasises on both supply-side characteristics especially on the weak industrial base and low added-value production and the demand-side aspects particularly on the fiscal policies and financialisation that led to the genesis of the ‘intermediate’ economies in Southern Europe. Finally, it shows that mechanisms that made Greece and Portugal vulnerable when the global financial crisis hit Europe.