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The Euro Area and the Rise of the BICs: An Asymmetric Shock

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Rising Powers and Economic Crisis in the Euro Area

Part of the book series: Global Reordering ((GRP))

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Abstract

The euro area is not an island. The first years of the life of the single currency coincided with tectonic global economic shifts. The accession of China to the World Trade Organization symbolized the rise of Brazil, India and China (BICs). This chapter discusses how this transformation of the global economy interacted with the adoption of the single currency and what the consequences have been for the extra-regional trade balances of the euro area. It is demonstrated that the often-hailed success of the region in global trade hides important differences in export performances and trade balances between coordinated market economies (CMEs) in the north and mixed-market economies (MMEs) in the south. Extra-regional trade deficits of southern member states have been almost as important as those within the region. On an aggregate level, we explain how these different performances can be related not only to different wage-setting institutions but also to differences in the economic structure (the kind and quality of products that are manufactured), skill-formation and innovation regimes. Finally, the role of the BICs in the monetary and trade domain and its divergent impact on the CME and MME groups are analyzed.

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Authors and Affiliations

  1. Department of Political Science, Ghent University, Gent, Oost-Vlaanderen, Belgium

    Ferdi De Ville & Mattias Vermeiren

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  1. Ferdi De Ville
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  2. Mattias Vermeiren
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De Ville, F., Vermeiren, M. (2016). The Euro Area and the Rise of the BICs: An Asymmetric Shock. In: Rising Powers and Economic Crisis in the Euro Area. Global Reordering. Palgrave Pivot, London. https://doi.org/10.1057/978-1-137-51440-0_3

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