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European Economic Integration and South-East Europe

European Economic Integration and South-East Europe

Challenges and Prospects

Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald

With both transition dynamics and the EU integration process having shifted to the south-east of Europe, a region fairly marginalized in the literature, this book fills a gap by taking stock of where South-East Europe’s economies and institutions stood in 2004. The authors evaluate the potential for investment and growth within the South-East European region, including the role of trade and FDI, and discuss the challenges associated with unemployment, poverty and ‘brain drain’. The book also provides insights into the particular monetary and exchange rate policies applied, including cases of ‘euroization’, and finally makes an assessment, against this background, of the European perspective of the countries of South-East Europe.

Chapter 20: Unemployment, poverty and brain drain: summing up

Thomas Wieser

Subjects: economics and finance, regional economics, urban and regional studies, regional economics

Extract

Thomas Wieser We know that the starting conditions for transformation in South-East Europe have been considerably more difficult than anywhere else in Europe because of the combination of three challenges: First, the transformation from a market social system as in former Yugoslavia appears to be even more difficult than from a truly centrally planned economy. Second, we simultaneously had in this region the problem of state building, which most other transformation countries (despite the drifting apart of a former Czechoslovakia) did not have. Third, the problems of conflict and war. The results have been a widespread combination of huge poverty, unemployment, organized crime and a surging informal sector. All of that is underpinned by weak institutions. By way of illustration, GDP per capita in Serbia at the time of writing is just slightly more than half of what it was one and a half decades ago. What are the causes for high unemployment? What are the consequences? Do we have possible remedies? How did we get here? Where are we going? What are the chances for reforms from within? And what can we, from outside, do to help, apart from giving good advice? These are questions to which we expected some answers from the preceding contributions by Robert Holzmann (Chapter 17), Tito Boeri (Chapter 18) and Kalman Mizsei and Nicholas Maddock (Chapter 19). Basically the contributions of Holzmann, Boeri, and Mizsei and Maddock, despite all their differences in approach and analysis, suggest the following: poverty is...

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