By Sabine Urban (auth.), Sabine Urban (eds.)
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Extra info for Europe’s Economic Future: Aspirations and Realities
But as well as this, regional aid in its present form works against the "trickle-down" effect which, in a free economy, tends to transfer the benefits of innovation at the centre out to the hinterland. As new products reach the stage of standardization and mass production, it makes economic sense to produce them, not in the conurbations where they have been developed by highly skilled and highly paid people, but in smaller towns where a cheaper and lower-quality labour force is available. Such a pattern is evident, for example, in the United States, and is part of the cause of consistently higher employment growth there than in Europe.
It is estimated that in Italy two thirds of domestic inflation is caused by wage increases. 37 II. The feasibility of the convergence policy: internal influences There are a number of problems of credibility and influences affecting the feasibility of the structural readjustment policy that has been launched. These problems are linked both to domestic problems and to the European context. But let us begin with the former. At the time of writing, the financial readjustment programme was still being debated in Parliament, so it was not possible to know if any elements would be left out of the final approved version.
This is because their lobbying can divert it into their own constituencies. Consequently, even though money from the EC may be only 5% of a typical peripheral country's GDP, it may be 50% of its PDI, which explains the intense interest which it has for politicians. In a parallel way, this may also be the only money which allows publicly-employed administrators, engineers and architects to exercise fully the brilliant talents which they know themselves to possess, but which they feel are otherwise given inadequate scope.
Europe’s Economic Future: Aspirations and Realities by Sabine Urban (auth.), Sabine Urban (eds.)