Central, Eastern and Southeastern Europes reunion with Europe

The successful economic transition of the Central, Eastern and Southeastern European (CESEE) countries was mainly due to the fact that shortly after the period of disinflation and liberalization, they joined the European global value chains (GVCs), which enabled them to enter a high export-led growth path. While stabilization policies were more sustainable in those CESEE countries that adopted floating exchange rates, their growing export potential weakens the case for postponing euro adoption. Poland was among the CESEE countries that managed to avoid the banking crisis during the global financial crisis of 2007_2009 owing to its macroprudential policy, which channelled the popular foreign currency denominated loans to wealthier households capable of servicing them even after a substantial depreciation of the Polish zloty. The experiences of the countries which have successfully modernized their economies suggest that an effective innovation policy in the CESEE region requires sufficiently independent public agencies capable of meeting the needs of technological firms.