Moving towards the Frontier: Reform and Sustainable Convergence in Central and Eastern Europe
12 Pages Posted: 25 Jun 2019
Date Written: October 5, 2017
The speed and sustainability of convergence in the region will crucially depend on reform efforts. As these countries get closer to the frontier, reforms that support innovation, selection and allocative efficiency will become more important. The quality of government, corruption, education, firm creation and resolution, financing of innovation and innovative firms will be key areas for reform. The Commission has recently made policy recommendations very much in line with these considerations. Looking forward, the more focused on and adequate to a country's position relative to the frontier, the more useful policy, and policy recommendations from outside, will be to promote sustainable convergence. EU and EA memberships serve as useful anchors for such reforms, but apparently this was more so before accession. Membership in itself does not guarantee sustainable convergence. Looking forward, euro adoption could serve as a motivating goal that boosts and focuses reform efforts in the region, but for this factor to work, people in the countries concerned will have to want euro adoption. Finally, reform reversals deserve particular attention.
Keywords: economic convergence, CESEE
JEL Classification: F15, O10, O19, O20, O43
Suggested Citation: Suggested Citation