Posted in Finance, Accounting and Economics Terms, Total Reads: 116
Eurosclerosis is used to refer to the situation of Europe in 1970s when there was stagnation in the growth of European countries. That was time in Europe when unemployment rose despite of the economic growth.
The term Eurosclerosis was coined by a German economist Herbert Giersch. He explained that the economic stagnation of Europe in 1970s has been resulted by various over-generous policies of the European governments which has resulted into the hardening of economic growth i.e. economy is not able to flex itself for more employment opportunities. There are various social /welfare models existing in Europe like Nordic, Anglosaxon, Continental etc. They have different welfare schemes like social insurance, labour market reforms and disability pension scheme etc. When these models tends to create overgenerous policies, they generally lead to a bad footprint on economy. One such policy is Unemployment Insurance scheme i.e. insurance income for those who couldn’t find a job. Today Eurosclerosis is used whenever there is a stagnation of growth of any country. It is said that only after the time of Eurosclerosis, there was forged a strong European Union bond in terms of trade policies, shared growth, industrial and political integration.
For Example: Eurosclerosis can be explained by a very recent activity in Europe. During the recent Syria civil war crisis, the Eurozone countries like Germany, have taken in thousands of refugees and allowed them to stay in their boundaries in Asylums. This activity could be seen as an example of generous policies of European countries. This could result in difficulty for the countries themselves which could hamper their own growth and create stagnation.