A glass half full

The twentieth anniversary of Central Europe’s accession to the EU should not only be an occasion to celebrate the region’s economic success, but also to reflect upon the developmental challenges awaiting it. The Central European countries’ membership in the EU has been a great economic success. The pace of economic growth has been relatively high, convergence has progressed, foreign trade has developed, direct investment inflows have continued, and unemployment has fallen to very low levels. Moreover, the countries of the region have managed to maintain their fiscal stability. However, this positive picture is marred by the fact that the convergence process has clearly slowed in many of the region’s countries over recent years, while the EU itself has lost momentum in its growth. In light of the serious threats on the horizon, such as supply chain disruptions, the demographic crisis, and Russia’s aggressive policy towards the West, Central Europe cannot rely solely on its position as a subcontractor to foreign corporations. It should learn from the mistakes made by the EU’s southern states, which at a certain point in their development fell into a trap of structural problems which led to prolonged economic stagnation.

In this report the authors analyse the economic position of Central Europe in the EU and the main challenges to its development; they propose actions which could be taken as a region to upgrade the economic model. These recommendations concern the EU’s Multiannual Financial Framework, the Single Market, industrial policy and infrastructural development.