Structural policies mark their return

2513918-3539943-photoeuropaThe difficulties associated with the crisis must not call structural policies into question. On the contrary: Mediterranean states’ tradition of support should continue, with an emphasis on industrial policies and continued efforts at opening up their markets.

The resumption of production could be a remedy to the current crisis in the Mediterranean. In its first report on “Crises and methods of emerging from crises in the Mediterranean”, Femise states the view that “long-term economic strategy should rest on the pursuit of international openness (…) “both in the North and the South.

Given that traditional structural policy in Mediterranean countries is based on support for major infrastructure, this must continue as said infrastructure helps open up regions.

“One must avoid the creation of pockets of wealth around capital cities”, asserts Professor Patrick Plane, who teaches at the Faculty of Economics at Clermont-Ferrand.

Professor Plane also advocates a resumption of industrial policies via the diversification of initial activities – which are often the product of the exploitation of raw materials – towards greater openness to service exports, citing the example of call centres and the increasing importance of hospital care as an export for Tunisia.

Mediterranean countries must broaden the base of their manufacturing sector in order to cope with competition.

FEMIP countries must promote access to credit for SMEs, reduce the burden of administrative formalities and, above all, promote convertibility through efforts to establish a stabilisation mechanism via the European Central Bank or – why not? – create a Mediterranean bank.

Photo by Europa, Econostrum.

Article by Nathalie Bureau du Colombier, Econostrum. It belongs to a series of articles published in the context of the partnership between Econostrum and Femise for the year 2010. These articles have been prepared for a special FEMSE event for the publication of FEMISE-EIB study on crisis.

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Countries in the Mediterranean basin must act not to counter the blow delivered by the recent crisis, but rather to protect themselves from “growing competition from China and the emergence of India, the potential impact of which will be greater for Mediterranean economies”, predicts Nicolas Péridy, a member of the Economics Laboratory Applied to Development  (LEAD) and coordinator of the report ”Crises and methods of emerging from crises in FEMIP partner countries” by Femise .
According to Mr Péridy, there is no doubt about this: “Levels of knowledge must increase in order to produce goods with high value-added. Mediterranean countries must turn towards the knowledge economy.”
The move from a subcontractor culture to co-contracting culture
Without upgrading to international standards, it will be difficult for them to access markets: no certification will mean no exports. From the explosion in the number of ISO-certified companies, it is clear that countries in the Mediterranean have understood this: numbering 10 in 1995, there are now 13,000 such companies.
What will this involve? Moving from a subcontractor culture to a co-contracting culture as part of a value chain. Nicolas Péridy also recommends greater openness in European agriculture markets, where the breeding grounds of poverty and illiteracy are found. “It would be desirable for Mediterranean countries to have greater access to European markets and that, in return, they commit to liberalising their service sectors”, he says.