Transition Countries Towards International Competitiveness

Most of the transition countries in Europe had significant benefits from the EU enlargement but the positive effects depend also from the structure of the economy and reforms of these countries. It’s important to analyze: if transition countries ensured sustainable economic reforms or just short term stability and emergent solutions. This paper will address international competitiveness which is the main challenge for the transition countries but also for the EU. First, monopoly position of some international firms in local markets and lack of creativity and innovations of the local firms, especially in Western Balkans due to lack of institutional support and non-stable business environment. The problem of creativity and lack of innovations by the firms is also a serious issue for the EU countries. The second important issue is large productivity gap. The recent global financial crisis as well as EU crises present the difficulties in the Euro zone and highlighted the interdependence of national economies and the convergence problems within European Union. The third challenge is absorption capacity for the structural and cohesion funds. The past experience of Central European countries shows that success in effectively using the EU financial and technical assistance is positively related with the success of countries on creating sustainable economic development and international competitiveness. Fourth issue is that some transition countries achieved economic growth but due to unequal distribution of welfare on these countries there is no significant reduce of unemployment and social cohesion. Last but not least the international competitiveness in most of the countries is harmed by the lack of functional institutions due to high level of corruption, inefficiency, rule of law, the lack of transparency and accountability.