Economic Divide in the European Union: An In-depth Analysis of Europe's Southern Mediterranean Economies

Open Access
Author:
Niznik, Jenna Marie
Area of Honors:
International Business (Behrend)
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Terrence Robert Guay, Thesis Supervisor
  • Terrence Robert Guay, Honors Advisor
  • Vernis Michael Welmon, Faculty Reader
Keywords:
  • Europe
  • European Union
  • EU
  • Debt Crisis
  • Euro
  • Portugal
  • Italy
  • Greece
  • Spain
  • PIGS countries
Abstract:
Our world and the countries and business environments which comprise it continue to become more and more integrated and intertwined each and every day. It is no longer about the American economy or the European economy or even the powerhouse Chinese economy; today, what is of utmost importance is the global economy. The situations, decisions, and business environments of one country and economic area absolutely have impacts and repercussions on the rest of the world. As such, the world waits with bated breath as the European Union with its common currency faces its darkest hour. As the European debt crisis continues to draw attention, incite speculation, and crush the confidence of the public and its investors, this thesis attempts to answer the perplexing question . . . “Why?” Why the southern Mediterranean countries? Why are the southern European member states the ones which are struggling financially and facing massive national debts and deficits? Is there a common way of life, culture, mentality, or some other entity, which is present in these southern countries that is causing them to perform poorly? Through extensive research and analysis, I have assessed the current state of each of the four PIGS (Portugal, Italy, Greece and Spain) countries. I have attempted to understand which factors, whether cultural, economic, political, or other, have played a role in their current state, and I have then determined whether there are any similar factors among the four countries that can be attributed to a Mediterranean way of life. What I have concluded is that the common cultural, economic and political factors were significant contributing factors to the European debt crisis. These common factors caused the PIGS countries to (1) fail to effectively use the money given to them to improve their economies, (2) fail to collect the money that was rightfully owed to them, and (3) waste the money given to them to satiate a lifestyle that was beyond their means. All of these failures contributed to the growing obligations of the countries and prevented them from using a period of growth and prosperity to make sure that their countries’ financial positions were in order. All in all, the cultural, structural, and/or governmental factors in Portugal, Italy, Greece and Spain were an instrumental component of the European debt crisis that is now testing the resilience of the European Union’s common currency.