Stacking the Deck in Their Favor: State-Driven Adjustment Toward Monetary Union in Belgium and the Netherlands

When examining exposure to the Euro-crisis, EMU’s small corporatist economies have fared comparatively well.  Current literature focuses on the institutional advantages of coordinated wage setting in steering macroeconomic adjustment within a common currency. However, few examine whether actors within corporatist economies made conscious institutional modifications prior to 1999 that made these states well-suited towards operating in a monetary regime where macroeconomic adjustment tools were significantly curtailed.  In this paper, we focus on adjustments made in Belgium and the Netherlands during the 1990s, which made these economies particularly “EMU ready”.  We argue that in both countries, the state played a crucial role in making their wage-setting institutions flexibly adaptive under the euro, stacking the odds in favor of their economic success.