Achieving Economic Sustainability in CESEE Countries
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 1: The necessity of sustainable growth and continued income convergence in Europe
The purpose of this chapter is to investigate the relevance of balanced growth in Central, Eastern and South-Eastern Europe (CESEE), to discuss the characteristics of a sustainable growth model in the region and to stress the impact of pronounced boom–bust cycles on the long-term income convergence process in Europe. In the early 2010s we are still in economic and financial crisis, and the storm is not over yet. The crisis that started to emerge in 2008 has taught us that the economic difficulties of many countries in Europe reflect long- term problems inherent in economic and political institutions. There are no quick fixes for these long-term issues, but it is crucial to take the right measures now. On the one hand, it is important to contribute effectively to business cycle stabilization and to support a smooth recovery in Europe. For instance, the reduction of both public and private sector indebtedness is necessary for regaining the trust of international investors. At the same time, however, a vicious circle of consolidation measures which erode domestic demand and therefore delay the recovery has to be avoided.
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