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Structural Challenges for Europe

Edited by Gertrude Tumpel-Gugerell and Peter Mooslechner

The main thrust of the book is that the sharing of mutual experiences is important for generating an acceptable policy mix, both at EU and national levels. The contributors highlight key financial issues, including the role of FDI and of foreign banks in the still ‘under-banked’ acceding countries, the re-launch of social security systems and the fiscal challenges of financing the catch-up process. They also examine the ongoing EU debate surrounding the application of the Stability and Growth Pact in Central and Eastern European Countries (CEECs) and go on to explore the contrasting evidence that some CEECs have shown more extensive privatisation efforts than some EU countries.
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Chapter 10: Catching up and the growth factors – the state of play in Bulgaria

Mariella Nenova


Mariella Nenova 1. INTRODUCTION Few countries in the world have been able to manage a successful catchingup process – Ireland is an example for the EU member states. The short history of transition indicates that 12 years after the initial slump triggered by the collapse of the communist system, not all countries have managed to catch up even to their pre-transition levels. Obviously, to guide the economy to and along the path of a rewarding real convergence process requires very skilful management and a good economic policy mix. Government policy should be aimed at uncovering the forces underpinning strong real growth. The ex-communist countries started EU membership negotiations at different relative levels of income, which have not improved significantly yet. Table 10.1 shows that in the last five years three countries – the Czech Republic, Romania and Slovakia – have fallen behind their 1997 positions, one country – Bulgaria – has remained at the same level, and the other six have moved upwards. The most successful country has been Latvia, improving its position by 6 percentage points. The countries that have been able to move forward have registered average growth rates exceeding those of the EU by at least 2 percentage points (Figure 10.1). Table 10.1 GDP per capita in PPS (EU-15 ϭ 100) Czech Slovak Rep. Rep. Romania Bulgaria Lithuania Poland Slovenia Estonia Hungary Latvia 1997 2001 62 57 Ϫ5 49 47 Ϫ2 26 25 Ϫ1 28 28 0 35 38 ϩ3 37 40 ϩ3 66 69 ϩ3 38 42 ϩ5 47 51...

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