IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/48172.html
   My bibliography  Save this paper

Changing development prospects for the Central and Eastern European EU member states

Author

Listed:
  • Farkas, Beáta

Abstract

One of the fundamental goals of European integration is to provide less-developed member states opportunities for convergence and strengthen economic and social cohesion. Before the crisis the convergence process was impressive in the new member states. This success raises the question of how the institutions of the new EU member states match the institution types previously worked out for the old member states, and whether they resemble any of the broadly accepted four models of capitalism (Anglo-Saxon, Nordic, Continental European and Mediterranean) or represent a new type of model. Empirical analysis suggests that an independent Central and Eastern European model is eligible for existence. The characteristics of the model may be derived from three main factors: the lack of capital, weak civil society and the impact of the European Union and other international organisations influencing the new member states. FDI inflow could help to reduce the lack of capital. The success of convergence can be explained through the reconfiguration of the value chain after the collapse of communism by companies located in Continental and Northern Europe. These companies located their assembly activities in Central and Eastern Europe, and these countries could integrate not only within the EU but also within the world economy through increased investment and productivity. Although this convergence model has its limits, it provided sufficient space for the Central and Eastern European countries to develop, due to their low initial GDP levels. During the crisis the convergence has slowed down. The forthcoming period makes some changes in the convergence model necessary. The reduction in the private sector savings-investment gap is unavoidable. Savings must be used more efficiently than in the past. These suggestions are known in literature. However, two other important factors should also be taken into consideration. Failing to bridge the current productivity gap between foreign and domestic companies makes catching-up impossible. Population ageing and increased net migration from the Central and Eastern European countries has reached the level which demolishes their economic potential and destabilizes their societies in the medium and long run. These issues mean severe challenges on both national and European level.

Suggested Citation

  • Farkas, Beáta, 2013. "Changing development prospects for the Central and Eastern European EU member states," MPRA Paper 48172, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:48172
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/48172/1/MPRA_paper_48172.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hanousek, Jan & Kocenda, Evzen & Maurel, Mathilde, 2011. "Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis," Economic Systems, Elsevier, vol. 35(3), pages 301-322, September.
    2. Svejnar, Jan & Terrell, Katherine & Gorodnichenko, Yuriy, 2007. "When Does FDI Have Positive Spillovers? Evidence from 17 Emerging Market Economies," CEPR Discussion Papers 6546, C.E.P.R. Discussion Papers.
    3. André Sapir, 2006. "Globalization and the Reform of European Social Models," Journal of Common Market Studies, Wiley Blackwell, vol. 44(2), pages 369-390, June.
    4. Jean Pisani-Ferry & Pavle Petrovic & Michael A Landesmann & Vladimir Gligorov & Daniel Daianu & Torbjörn Becker & Zsolt Darvas & André Sapir & Beatrice Weder di Mauro, . "Whither growth in central and eastern Europe? Policy lessons for an integrated Europe," Blueprints, Bruegel, number 453, June.
    5. Barry, Frank & Bergin, Adele, 2012. "Offshoring, Inward Investment and Export Performance in Ireland," Papers WP430, Economic and Social Research Institute (ESRI).
    6. repec:ulb:ulbeco:2013/8112 is not listed on IDEAS
    7. Vasily Astrov & Vladimir Gligorov & Doris Hanzl-Weiss & Peter Havlik & Mario Holzner & Gabor Hunya & Michael Landesmann & Sebastian Leitner & Zdenek Lukas & Anton Mihailov & Olga Pindyuk & Leon Podkam, 2012. "New Divide(s) in Europe?," wiiw Forecast Reports 9, The Vienna Institute for International Economic Studies, wiiw.
    8. Farkas, Beáta, 2012. "The Impact of the Global Economic Crisis in the Old and New Cohesion Member States of the European Union," Public Finance Quarterly, Corvinus University of Budapest, vol. 57(1), pages 53-70.
    9. Beata Farkas, 2011. "The Central and Eastern European model of capitalism," Post-Communist Economies, Taylor & Francis Journals, vol. 23(1), pages 15-34.
    10. Péter Halmai & Viktória Vásáry, 2012. "Convergence crisis: economic crisis and convergence in the European Union," International Economics and Economic Policy, Springer, vol. 9(3), pages 297-322, September.
    11. Martin Raiser & Indermit S. Gill, 2012. "Golden Growth : Restoring the Lustre of the European Economic Model," World Bank Publications - Books, The World Bank Group, number 6016.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rapacki, Ryszard & Gardawski, Juliusz & Czerniak, Adam & Horbaczewska, Bożena & Karbowski, Adam & Maszczyk, Piotr & Próchniak, Mariusz, 2018. "Wyłaniające się odmiany kapitalizmu w Europie Środkowo-Wschodniej: przegląd badań [Emerging varieties of capitalism in Central and Eastern Europe: a review]," MPRA Paper 90363, University Library of Munich, Germany, revised 2018.
    2. Ivan Todorov, 2016. "Currency Integration of the New EU Member Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 82-117.
    3. Prochniak, Mariusz & Rapacki, Ryszard & Gardawski, Juliusz & Czerniak, Adam & Horbaczewska, Bozena & Karbowski, Adam & Maszczyk, Piotr & Towalski, Rafal, 2017. "Wyłaniające się modele kapitalizmu w Polsce i krajach Europy Środkowo-Wschodniej na tle Europy Zachodniej [Emerging models of capitalism in Poland and CEE countries in comparison to Western Europea," MPRA Paper 83977, University Library of Munich, Germany.
    4. Rapacki Ryszard & Czerniak Adam, 2018. "Emerging models of patchwork capitalism in Central and Eastern Europe: empirical results of subspace clustering," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 54(4), pages 251-268, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Beáta Farkas & Michael Landesmann & Leon Podkaminer, 2013. "Monthly Report No. 1/2013," wiiw Monthly Reports 2013-01, The Vienna Institute for International Economic Studies, wiiw.
    2. Farkas Beáta, 2018. "What can institutional analysis say about capitalism in Central and Eastern Europe? Results and limitations," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 54(4), pages 283-290, December.
    3. Slavo Radosevic & Katerina Ciampi Stancova, 2018. "Internationalising Smart Specialisation: Assessment and Issues in the Case of EU New Member States," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(1), pages 263-293, March.
    4. Helena Tendera-Właszczuk & Michał Szymański, 2017. "Distinct and yet not Separate: Revisiting the Welfare Models in the EU New Member States," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(1), pages 131-149.
    5. Rainer Schweickert & Markus Ahlborn & Karol Frank & Ivana Sikulová & Ágnes Orosz & Miklós Szanyi, 2013. "Large-Scale Transformation of Socio-Economic Institutions – Comparative Case Studies on CEECs (Interim Report). WWWforEurope Working Paper No. 16," WIFO Studies, WIFO, number 46871, April.
    6. André Sapir, 2014. "Still the Right Agenda for Europe? The Sapir Report Ten Years On," Journal of Common Market Studies, Wiley Blackwell, vol. 52, pages 57-73, November.
    7. Mateusz Pipień & Sylwia Roszkowska, 2019. "The heterogeneity of convergence in transition countries," Post-Communist Economies, Taylor & Francis Journals, vol. 31(1), pages 75-105, January.
    8. Mirjana Gligoric, 2014. "Paths Of Income Convergence Between Country Pairs Within Europe," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 59(201), pages 123-156, April – J.
    9. Anna Maria Ferragina & Fernanda Mazzotta & Erol Taymaz & Kamil Yilmaz, 2013. "The Impact Of Fdi On Firm Survival And Employment: A Comparative Analysis For Turkey And Italy," ERSA conference papers ersa13p1211, European Regional Science Association.
    10. Pavla Nikolovova, 2012. "The Impact of FDI on the Host Economy," CERGE-EI Working Papers wp471, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    11. Völlmecke, Dominik & Jindra, Björn & Marek, Philipp, 2016. "FDI, human capital and income convergence—Evidence for European regions," Economic Systems, Elsevier, vol. 40(2), pages 288-307.
    12. Agata Adamska & Tomasz J. Dabrowski, 2017. "Reputacja jako instytucja: proba konceptualizacji i problemy pomiaru / Reputation as an Institution: An Attempt to Conceptualize and Measure Issues," Annales. Ethics in Economic Life, University of Lodz, Faculty of Economics and Sociology, vol. 20(2), pages 77-88, February.
    13. Bruno Amable, 2009. "The Differentiation of Social Demands in Europe. The Social Basis of the European Models of Capitalism," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 91(3), pages 391-426, May.
    14. Apostolov Mico, 2016. "Foreign Direct Investments Induced Innovation? A Case Study − Macedonia," Comparative Economic Research, Sciendo, vol. 19(1), pages 5-25, March.
    15. Tausch, Arno, 2007. "Correctly finger-pointing the Lisbon-process-villains," MPRA Paper 1890, University Library of Munich, Germany.
    16. Karbowski, Adam, 2019. "Analiza otoczenia instytucjonalnego systemu tworzenia wiedzy w krajach Europy Środkowej [Analysis of the institutional environment of the knowledge subsystem in Central Europe]," MPRA Paper 95570, University Library of Munich, Germany, revised 2019.
    17. Czesława Pilarska, 2018. "Efekty zewnętrzne bezpośrednich inwestycji zagranicznych z perspektywy kraju goszczącego," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 93-124.
    18. Pisany Paweł, 2016. "Comparative Models of Capitalism in the Areas of Financial System and Corporate Governance – the Diversity of Capitalism Approach Perspective," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 52(1), pages 59-76, December.
    19. Olivier N. Godart & Holger Görg, 2016. "Suppliers of multinationals and the forced linkage effect: Evidence from firm level data," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT, chapter 15, pages 277-288, World Scientific Publishing Co. Pte. Ltd..
    20. Pasquale Tridico, 2011. "Varieties of capitalism and responses to the Financial Crisis: the European social Model versus the US Model," Departmental Working Papers of Economics - University 'Roma Tre' 0129, Department of Economics - University Roma Tre.

    More about this item

    Keywords

    Central and Eastern European; convergence; global crisis; varieties of capitalism;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:48172. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.