Central and Eastern Europe: Trapped in Integration?

Leon Podkaminer

Acta Oeconomica, 2015, vol. 65, issue supplement1, 83-106

Abstract: The Central and Eastern European new Member States of the European Union (CEECs) went through the transition process following the commandments of the Washington Consensus, which gradually evolved into the “integrative growth model”. External liberalisation exposed the CEECs to recurring problems over external imbalances, bubbles driven by capital inflows, and resulting growth instabilities. Large foreign direct investment inflows attracted by repressed wages and low taxes do not accelerate growth. Arguably, real convergence would be much faster under a system with built-in limitations to free trade, free capital movements – and with more scope for traditional industrial, trade, incomes, and fiscal policies.

Keywords: transition; liberalisation; real convergence; cost competitiveness; FDI; integration (search for similar items in EconPapers)
JEL-codes: E25 F15 O24 P27 (search for similar items in EconPapers)
Date: 2015
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