Central and Eastern Europe: Looking for the Next Best Goal?

Abstract

This analysis reviews the experience of countries in Central and Eastern Europe before and during the current Long Recession with the aim to distinguish underlying longer-term trends and draw possible conclusions for the future strategic goals of the European Union.

In a movie directed by Woody Allen entitled “Like Anything Else,” an older and more experienced stand-up comedy writer gives advice to a younger colleague saying “Always strive for originality, but if you have to copy, copy from the best.” In the economic profession, copying the economic model and strategy of the best countries in terms of economic performance has been a universal practice brought up into wisdom. The collapse of the socialist system in Central and Eastern Europe at the end of the 80s, perished the thought on which is the best economic model to copy at national and global level. The ideal strategies to deliver prosperity included market liberalisation, integration in the world production chains, specialisation in sectors with high value-added, price stability and financial liberalisation to utilise the worldwide financial infrastructure based on the US dollar. Within Europe countries, which could afford it, were aiming at imitation or integrating into the German economic model of export-led industrial growth generating surplus of savings, guaranteed by stable prices.

Keywords: Economic growth, macro-economic stability, welfare, long technological cycles, business cycles, systemic crisis.

JEL Classification: E2, E3, E4, E5