Economic Adjustments in New Democracies: Lessons from Southern Europe

193 Pages·1997·9.02 MB·English

by  Diane Ethier

Economic Adjustment in
New Democracies
Lessons from Southern Europe
Diane Ethier
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Economic Adjustment
in New Democracies
Lessons from Southern Europe
Diane Ethier
Associate Professor of Political Science
Universite de Montreal
Quebec, Canada
Translated by Roy Cartlidge
tt
M First published in Great Britain 1997 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS and London
Companies and representatives throughout the world
A catalogue record for this book is available from the British Library.
ISBN 0-333-69556-9
t£ First published in the United States of America 1997 by
ST. MARTIN'S PRESS, INC.,
Scholarly and Reference Division,
175 Fifth Avenue, New York, N.Y. 10010
ISBN 0-312-17368-7
Library of Congress Cataloging-in-Publication Data
Ethier, Diane.
Economic adjustments in new democracies : lessons from Southern
Europe / Diane Ethier.
p. cm. — (International political economy series)
Includes bibliographical references and index.
ISBN 0-312-17368-7 (cloth)
1. Europe, Southern—Economic conditions. 2. Europe, Southern-
-Economic policy. I. Title. II. Series.
HC244.5.E78 1997
330.946—dc2i 96-52879
CIP
©Diane Ethier 1997
All rights reserved. No reproduction, copy or transmission of this publication may be made
without written permission.
No paragraph of this publication may be reproduced, copied or transmitted save with
written permission or in accordance with the provisions of the Copyright, Designs and
Patents Act 1988, or under the terms of any licence permitting limited copying issued by
the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE.
Any person who does any unauthorised act in relation to this publication may be liable to
criminal prosecution and civil claims for damages.
The author has asserted her right to be identified as the author of this work in accordance
with the Copyright, Designs and Patents Act 1988.
This book is printed on paper suitable for recycling and made from fully managed and
sustained forest sources.
10 9 8 7 6 5 4 3 21
06 05 04 03 02 01 00 99 98 97
Printed in Great Britain by
The Ipswich Book Company Ltd
Ipswich, Suffolk
Contents
List of Tables and Figures vii
Acknowledgements xii
List of Acronyms ix
Introduction: Democracies and Successful Adjustment 1
Part One
Economic Policies of Southern European Democracies
1 The Economic Context of Democratic Transitions 13
2 Spain: An Early and Durable Process of Adjustment 19
The beginnings of reforms by UCD governments: 1977-82 19
The deepening of reforms by PSOE governments: 1982-96 23
3 Portugal: A Late but Accelerated Process of Adjustment 35
The conflicting economic policies of the first democratic
governments: 1974-83 35
The achievement of reforms under socialist and social-democratic
governments: 1983-95 38
4 Greece: Timid and Fruitless Attempts at Adjustment 45
The expansionist policies of ND and PASOK governments:
1977-85 45
The sporadic and limited adjustment measures of PASOK
and ND governments: 1985-95 47
5 Comparative Results of Southern European Economic Policies 52
The reduction of inflation 52
The decrease in public debt and deficits 53
Improvement in the external trade balance 54
The implementation of structural reforms 57
Conclusion 60
v
VI Economic Adjustment in New Democracies
Part Two
The Determinants of Successful Adjustment: Lessons from Southern
Europe
6 The Governments' Commitment to Undertaking Reforms 65
Non-decisive determinants 65
Decisive determinants 73
Conclusion 87
7 The Governments' Ability to Implement Reforms 89
Main determinants 89
Their respective impacts in Southern European countries 90
Conclusion 110
Appendix: Tables and Figures 117
Notes 145
References 165
Index 176
List of Tables and Figures
Table 1: Greece, Spain, Portugal: Socio-economic Indicators
(1960-75) 117
Table 2: Spain: Economic Reforms Under Democratic
Governments (1977-95) 118
Table 3: Spain: Examples of Privatizations of INI Companies
(1984-90) 119
Table 4: Spain: Restructuring Programmes (1980-91) 120
Table 5: Spain: Net Foreign Investments (1982-89) 120
Table 6: Portugal: Economic Reforms Under Democratic
Governments (1976-95) 121
Table 7: Greece: Economic Reforms Under Democratic
Governments (1975-95) 122
Table 8: Attainment of EMU Convergence Norms (1994) 123
Table 9: Greece, Spain, Portugal: Inflation Rates (1980-94) 123
Table 10: Greece, Spain, Portugal: Consumption, Growth and
Interest Rates (1980-90) 124
Table 11: Greece, Spain, Portugal: GDP Growth Rates (1980-94) 124
Table 12: Greece, Spain, Portugal: Net Direct Foreign Investments 124
Table 13: Greece, Spain, Portugal: Total Public Debt/GDP Ratio
(1980-94) 124
Table 14: Greece, Spain, Portugal: External Public Debt/GDP Ratio
(1980-94) 125
Table 15: Greece, Spain, Portugal: Central Government Debt
(1980-94) 125
Table 16: Greece, Spain, Portugal: Central Government Deficit
(1980-94) 125
Table 17: Greece: Expenditures and Revenues of Central
Government (1980-94) 126
Table 18: Portugal: Expenditures and Revenues of Central
Government (1980-94) 127
Table 19: Spain: Expenditures and Revenues of Central Government
(1980-94) 128
Table 20: Greece, Spain, Portugal: Balance of Payments (1980-94) 129
Table 21: Greece and Spain: Volume of Imports and Exports
(1980-90) 129
Table 22: Greece, Spain, Portugal: Trade Balances (1980-94) 130
VI1
Vlll Economic Adjustment in New Democracies
Table 23: Greece, Spain, Portugal: Distribution of Value-added
Within Industrial Sector 130
Table 24: Greece, Spain, Portugal: Contribution of Equipment
Expenditures to Internal Demand (1986-94) 130
Table 25: Greece, Spain, Portugal: Evolution of Labour Costs
(1980-94) 131
Table 26: Greece, Spain, Portugal: Structure of GDP (in %) 131
Table 27: Greece, Spain, Portugal: Distribution of the Labour Force 131
Table 28: Results of the Parliamentary Elections in Spain (1977-96) 132
Table 29: Results of the Parliamentary Elections in Greece
(1974-93) 133
Table 30: Results of the Paliamentary Elections in Portugal
(1976-95) 134
Table 31: Greece, Spain, Portugal: Total Resources Devoted to
ESCPs (1988-99) 135
Table 32: Greece, Spain, Portugal: Total Community Grants
(1988-99) 136
Table 33: Spain: Social Agreements (1977-92) 137
Table 34: Greece, Spain, Portugal: Unemployment Rates (1980-94) 138
Table 35: Greece: Comparative Influence of Political Parties Within
Main Interest Groups (1990) 138
Figure 1: Greece, Spain, Portugal: Geographic Distribution of
Imports (1980-92) 139
Figure 2: Greece, Spain, Portugal: Geographic Distribution of
Exports (1980-92) 140
Figure 3: Greece, Spain, Portugal: Value of Imports and Exports
(1980-92) 141
Figure 4: Greece, Spain, Portugal: Structure of Imports (1980-92) 142
Figure 5: Greece, Spain, Portugal: Structure of Exports (1980-92) 143
Figure 6: Southern European Governments' Capacity to Implement
SMs and SCMs 144
List of Acronyms
AD: Alianca democratico
AFM: Armed Forces Movement
AP: Alianza Popular
BBV: Banco de Bilbao et Viscaya
BCA: Banco de Credito agricola
BCI: Banco de Credito industrial
BCL: Banco de Credito local
BEE: Banco exterior de Espaha
BHE: Banco hypotecario de Espaha
BP: balance of payments
BT: balance of trade
CAB: current account balance
CAP: Common Agricultural Policy
CC.OO: Commissiones obreras
CDS: (Spanish) Centro democratico y social
CDS: (Portuguese) Centro democratico e social
CEOE: Confederacion espanola de las organizaciones
empresariales
CET: common external tariff
CGTP-IN: Confederacion general de los Trabalhadores Portuguese-
Intersyndical
CID: customs import duty
CiU: Convergencia i Unio
CNT: Confederacion nacional de los Trabajadores
CP: Coalicion Popular
CPF: Confederation of Portuguese Farmers
CPI: Confederation of Portuguese Industries
CPM: Confederation of Portuguese Merchants
CPU: collective production units
CSF: community's support frameworks
DC: democratic consolidation
DCG: durable consumer goods
DFI: direct foreign investment
DGPE: Direccion general del Patrimonio Espahol
DT: democratic transition
EA: Economic Adjustment
IX