The problem with Greece, Ireland, Italy, Portugal, and Spain is that they are uncompetitive and need to internally devalue – or so the argument goes. This paper challenges this conclusion by pointing out that the measure used to back it up – unit labour costs – is flawed and misguided. Europe’s periphery lack of competitiveness is related to the types of products they export and not to the fact that their labour is expensive.
Πηγή: Levy Economics Institute