Economic Convergence and Divergence in Europe
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Economic Convergence and Divergence in Europe

Growth and Regional Development in an Enlarged European Union

Edited by Gertrude Tumpel-Gugerell and Peter Mooslechner

This highly topical book addresses the challenge of economic convergence within Europe, beginning with a thorough review of the theory of growth and related empirical research. Historical and more recent economic developments within the present EU and current accession countries are discussed, along with the design for the process of further integration of accession countries into the EU and the Euro area. Moreover, the potential to achieve a sustainable catch-up process in Western Balkan countries, the Ukraine and Russia is explored, focusing on the task facing the EU in designing proper policies vis-à-vis these countries. The contributors’ varied perspectives ensure that the theories and policies postulated are linked closely with the actual situation in accession countries and offer up-to-date insights.
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Chapter 8: Structural change and catching up: the experience of the ten candidate countries

János Gács


János Gács 8.1. INTRODUCTION1 The transformation of former centrally planned economies since the late 1980s was tantamount to perpetual and simultaneous structural shifts in these economies. If one were to classify these structural changes based on the factors that triggered them the following three main classes could be distinguished: ● ● ● First we should refer to the systemic changes that opened new opportunities for the actors in the economy, particularly through liberalization (of economic activities in general, including entry to markets, engaging in foreign trading, price formation) and the establishment of basic institutions of the market, or marketization (including privatization of state-owned enterprises). The structural changes then were the outcome of the ensuing adjustments to the new opportunities and constraints, an endogenous process steered by the emerging incentives in the new environment. These incentive structures were assumed to be similar to those prevailing in developed market economies; however, by now we know that in addition to the traditional market incentives, the transition period also offered unique, peculiar incentives. The evolution of the growth process has also left its trace on the structure of the economy through the pattern of uneven growth and decline of sectors. The first phase of this process was the painful shock of the transformational recession; this was followed by the recovery, which gradually transforms to the process of real convergence toward the level of developed market economies. Choices and policy decisions by governments, whether in the form of measures related to the initial macroeconomic stabilization,...

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