Can the EU develop a concerted mechanism for union wide economic convergence?

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Politics
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Many of the eurozone’s peripheral economies are now forced to implement strong austerity measures. Unless the private sectors of these countries are able to soak up the slack caused by cuts in public expenditure,  these economies may suffer from negative growth and deflation for years, thereby also deflating their national debt. Moreover, even if the southern countries succeeded in stabilising their budgets and debt levels, none of the underlying problems that caused the crisis are being solved. The structural differences among EU’s economies still remain. If the southern economies don’t diversify from their dominant low productivity sectors such as agriculture and real-estate to higher productivity sectors, there is nothing that will stop inflation from creeping into them again in the future.

Is structural development likely in the southern economies? Can the EU develop a concerted mechanism for union wide economic convergence? Is transnational fiscal policy the solution? Should industrial policy be introduced at the EU-level? What would be the pros and cons involved with such a move from social, political and economic perspectives?  Can the productivity gaps between the core and periphery be closed to rein in asymmetric inflation pressures within the monetary union?

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