Chapter 8: Growth Resurgence, Productivity Catching-up and Labour Demand in Central and Eastern European Countries
Peter Havlik, Sebastian Leitner and Robert Stehrer 8.1 INTRODUCTION The collapse of communist regimes in Central and Eastern Europe in 1989–90 marked a historical event for the countries on both sides of the Iron Curtain. The years that followed after the political upheaval have been characterized first by a severe and widely unexpected decline of economic activities in the whole region, followed by a phase of rapid recovery, economic restructuring, as well as productivity and technological catching-up, all occurring simultaneously roughly since 1995. The economic opening resulted in a redirection of trade flows towards Western Europe and in the attraction of foreign direct investment (FDI), which also facilitated outsourcing activities from Western Europe, in particular from the bordering countries Austria and Germany. This highly dynamic process of economic restructuring, trade integration and catching-up raises new challenges and opportunities for the whole of Europe. However, the challenges of the economic restructuring process were mainly felt in the Central and Eastern European countries and partly in the neighbouring economies such as Austria and Germany. In this chapter we investigate mainly the period 1995–2007 for five Central and Eastern European (CEE) countries: the Czech Republic, Hungary, Poland, Slovakia (Slovak Republic) and Slovenia, and compare their growth and productivity performance with a group of Western European economies (EU-15) in order to provide a wider comparison of restructuring and catching-up processes in the period before and immediately after their EU accession. For this purpose we mainly rely on the latest version of the...
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