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Investment-led growth: a solution to the European crisis

Investment-led growth: a solution to the European crisis

Cozzi, Giovanni and Griffith-Jones, Stephany (2016) Investment-led growth: a solution to the European crisis. In: Mazzucato, Mariana and Jackobs, Michael, (eds.) Rethinking Capitalism: Economic Policy for Sustainable and Equitable Growth. Political Quarterly Monograph Series, 86 (S1). Wiley-Blackwell, London, pp. 119-133. ISBN 9781119120957 (doi:10.1111/1467-923X.12236)

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Abstract

In this chapter we argue that low investment is at the root of European stagnation, and that a sustained (and sustainable) recovery can only be investment-driven. Investment is necessary to cure insufficient demand and unemployment in the short run, but also to introduce innovative technologies and increase potential output in the long run. Moreover, only higher investment can reverse the disquieting trend of de-industrialization that can be observed throughout Europe.

In this chapter we make specific proposals on how the EIB, the EU’s regional development bank, can significantly expand its lending to stimulate growth, investment and innovation, particularly in the countries that have suffered most during the sovereign debt crisis. This would help deal with the fragmentation of financial and banking markets, which has emerged in Europe since the crisis and has caused enterprises to be severely credit-rationed, particularly in the periphery of the continent.

Item Type: Book Section
Uncontrolled Keywords: Industrial policy, Investment policy, Innovation, Jobs, Sustainable economic growth
Subjects: H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Greenwich Political Economy Research Centre (GPERC)
Last Modified: 28 Jul 2017 09:16
Selected for GREAT 2016: None
Selected for GREAT 2017: GREAT a
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/14297

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