Including Institutions : Boosting Resilience in Europe
The 2008 crisis marked the beginning of a lost decade for many countries - and many people - in the European Union (EU). The crises of 2008 and 2012 halted, and in some countries undid, a decade of growth and economic convergence across the EU. Thi...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/613961584510373964/Including-Institutions-Boosting-Resilience-in-Europe http://hdl.handle.net/10986/33463 |
| Summary: | The 2008 crisis marked the beginning of
a lost decade for many countries - and many people - in the
European Union (EU). The crises of 2008 and 2012 halted, and
in some countries undid, a decade of growth and economic
convergence across the EU. This report argues that the
economic shocks revealed large differences in the resilience
of individual economies, associated with differences in the
quality of country-level institutions that shaped the
absorption and response to these shocks. The report is in
two parts. Part one uses an inclusive growth framework that
assesses the trends in economic growth, the sharing of that
growth, and its resilience. Part two looks closer at a key
aspect of resilience: what are the key institutions that
affect an economy’s resilience or capacity to respond to
shocks. This report finds that in many European countries,
growth was shared with low-income households; but these
households were shielded less well during downturns. During
the crises, the poorest fifth of households in both Central
Europe and Southern Europe saw deeper drops in incomes and
for longer periods than the median household. The report
puts a special emphasis on a country’s membership of the
European Monetary Union (EMU) - the eurozone. The report
finds that resilience of inclusive growth varied across EU
countries, when faced with the global financial crisis of
2008 and the euro crisis of 2012, because of the quality of
institutions. This report finds that boosting resilience of
EU member states should start with improving the real
exchange rate institutions. Resilience and flexible and
coordinated real exchange rate adjustments are short-term
measures to cushion shocks and support adjustment. |
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