Effectiveness of Economic Adjustment Programmes for Debt Crises Implemented in the Southern European Union Countries
Abstract
This article addresses the effectiveness of the economic adjustment programmes for debt crises implemented in the southern European Union countries, a rather contemporary, as well as disputable, issue. All South-European countries that faced a debt crisis had already adopted the European single currency – Euro. Our literature review depicts contemporary research work on debt crises, their economic and social implications either generally or, more relative to our work, South-European-country specific. Our research work is based on a wide range of statistical indices, in an effort to appreciate the effectiveness of the economic adjustment programmes, holistically. The countries addressed were Greece, Portugal, Spain and Cyprus. The applied statistical indices were grouped in six pillars that are considered to be essential to social prosperity. These pillars are financial prosperity, employment, healthcare, education, governance and entrepreneurship. All data were eventually incorporated in a single index, namely `Social Prosperity Index', in an attempt to attain a holistic view on the effectiveness of these programmes. This approach contradicts the mainstream approach of pure financially oriented assessments. Portugal scores first in this appraisal – not only fully recovering but even improving social prosperity standards for its citizens – followed closely by Spain and Cyprus. Greece recorded the worst classification, albeit the index is recovering to pro-crisis levels. Our empirical results suggest that these programmes had a significant impact on the countries that were implemented. In solely financial terms, the programmes proved to be quite effective for all countries. However, their effectiveness is rather questionable if we take into consideration all pillars of social prosperity. The most problematic pillar is employment, which challenges governments and especially their citizens. European and sovereign policies must urgently address employment problems, whereas economists are already talking about a `lost generation'.
Keywords: sovereign debt crisis, Euro, social prosperity, economic adjustment programmes, South Europe
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