Financial and Monetary Integration in the New Europe Convergence Between the EU and Central and Eastern Europe
Convergence Between the EU and Central and Eastern Europe
Edited by David G. Dickinson and Andrew W. Mullineux
Chapter 6: Latvia on the way to the European Union: economic policy convergence
6. Latvia on the way to the European Union: economic policy convergence ÿ Inna Steinbuka INTRODUCTION Full economic transformation is directly linked to European integration. The potential economic advantages of closer integration with the high-income, large EU market are: ¥ increasing EUÐLatvian trade and investments; ¥ strengthening the legal framework and institution-building in the process of gradual harmonization of Latvian legislation with EU standards; and ¥ promoting LatviaÕs macroeconomic and structural convergence towards the average level of the EU member states as a result of access to the structural funds of the EU. The Copenhagen Summit criteria provide a very broad guiding principle in several areas for the accession of the Central and Eastern European (CEE) countries to the EU. The Latvian adoption of the ÔMedium-term economic strategy in the context of accession to the European UnionÕ (Ministry of Finance . . . 1998) and signing of the ÔJoint assessment of the economic policy priorities of LatviaÕ (Ministry of Finance 1998; IMF 1999a) clearly demonstrates a strong determination to stick to the integration approach. The concept of distance from the EU is multidimensional. While the political, legal and institutional criteria cannot be overestimated, we focus more on the economic aspect. Thus, the focus of this chapter lies more in distance in terms of economic space. To approach the average level of EU living standards and to ensure sustainable economic development, Latvia has to pay special attention to evaluating its competitive capacity. The question of how long it will take Latvia to close the income gap...
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