Chapter

The Euro and Firm Restructuring

Matteo Bugamelli, Fabiano Schivardi and Roberta Zizza

in Europe and the Euro

Published by University of Chicago Press

Published in print April 2010 | ISBN: 9780226012834
Published online February 2013 | e-ISBN: 9780226012858 | DOI: http://dx.doi.org/10.7208/chicago/9780226012858.003.0004
The Euro and Firm Restructuring

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One of the main drivers of European integration was the idea that a more integrated European economy would promote economic efficiency, allowing countries to fully exploit their competitive advantages, fostering factor mobility and increasing allocational efficiency. The euro was a crucial milestone along this path. The productivity growth has been relatively stronger in those countries and sectors that relied more on competitive devaluations to regain price competitiveness before the euro was adopted. This finding is confirmed by an analysis of firm-level data from the Italian manufacturing sector. This study finds that low-tech businesses, which arguably benefited most from devaluations, have been restructuring more since the adoption of the euro. Restructuring has entailed a shift of business focus from production to upstream and downstream activities, such as product design, advertising, marketing, and distribution, and a corresponding reduction in the share of blue-collar workers.

Keywords: allocational efficiency; restructuring; euro; European integration; blue-collar workers

Chapter.  16367 words.  Illustrated.

Subjects: International Economics

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