Books

The New Political Economy of Emerging Europe

The volume is a comprehensive overview of developments in the region under a global perspective. It asks if and to what degree is the EU a solution to the developmental challenges of post-communist countries.

Comparative overview of empirical evidence. This survey of facts an figures of the 1989-2004 period highlights some of the major challenges for the region. First, for the frontrunner countries the current account deficits and the slowdown in FDI might foreshadow a decline in growth. For southeast Europe low activity levels, criminalization, payments deficits and high unemployment seem to form a vicious circle. In the NIS political and economic problems of the Dutch disease abound.

The European Union, especially with the failure of the Lisbon Agenda, is unlikely to provide additional growth impetus for the new members. The latter, by contrast, contribute to foot-dragging over macro-economically marginal transfers and thus to the laming of the decision-making structures.

Softening up the Stability and Growth Pact in March 2005 is a step in the wrong direction, based on contestable economics and political opportunism. While new members will face severing the conditions of entry to the euro zone, the signal is to let them be lenient on fiscal corrections. This will hurt growth/real convergence.

The book addresses the control case of China, asking if they indeed have found a substitute for everything, including private property and capital market. The answer is in the negative and more in lines with standard growth theory. If assessed realistically, there is high but not exceptional growth, there is no Chinese paradox. The exorbitant costs of regular bailing out of big banks is a writing on the wall.