What to do about divergence between EU countries? The problem of structural polarization

European countries diverge economically – not only by growth rates, but also in terms of the underlying structure of the economy. Philipp Heimberger and Jakob Kapeller argue that a policy mix of targeted public investment, wage-growth policies and financial sector regulation can lead to sustainable economic convergence among the EU’s Member States. These policies should specifically target countries of the “core”, the “periphery”, of Eastern Europe, and strongly financialised countries.