Catching-up Strategies in CESEE Economies
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 5: Growth Prospects in the EU-10 Members States After the Crisis
5. Growth prospects in the EU-10 member states after the crisis Dariusz K. Rosati INTRODUCTION 1 After having recovered from the transformational recession in the early 1990s, the countries of Central and Eastern Europe have been growing fast, gradually reducing income gaps between them and the more affluent countries of Western Europe. The rapid catching-up process has been fuelled by trade and financial integration as well as legal and institutional harmonization in the context of EU accession. But the global financial and economic crisis of 2008–09 hit the region particularly hard, with most countries suffering substantial falls in output levels, generally more severe than in Western Europe. Also, the subsequent recovery seems rather slow and hesitant. This chapter addresses the issue of growth prospects after the global crisis in ten Central and Eastern European countries that joined the EU in 2004–07 (EU-10). The purpose of the chapter is twofold. First, the chapter aims at explaining the phenomenon of rapid growth in EU-10 before the crisis and the subsequent massive fall of output during the crisis. Second, the chapter tries to answer the question whether economic growth will resume quickly and what changes in policies are needed, both in EU-10 and at the EU level, in order to make this process quick and sustainable. It is shown that between 2000 and 2008 economic growth in all EU-10 followed a specific pattern (although with individual variations), based on large inflows of foreign capital supported by trade, financial and institutional integration...
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