Macroeconomic imbalances in the EMU are at the heart of the current crisis. One explanation for the high current account deficits
in the Southern European countries is that they lack a large, competitive and export-oriented industrial sector. The paper
tests the hypothesis that parts of the structural change which happened in the EU before 2008 were supported by the divergent
unit labour cost developments in the EMU. We look into patterns of structural change and sectoral competitiveness in all EU
member countries and assess their linkages by means of a descriptive analysis as well as through econometric estimations.
Our results broadly support the hypothesis. Industrial policy, which aims at fostering new competitive export-oriented industries
in Southern Europe in order to reduce macroeconomic imbalances in the EMU, should thus be combined with adjustments in relative
Forschungsbereich:Makroökonomie und europäische Wirtschaftspolitik