Some Aspects of European Economic Area and Competitiveness

With eight former socialist economies joining the European Union, the European Economic Area underwent substantial change. Integration co-operation, mostly through the usage of structural funds requests partners on lower level of development to catch-up (converge) to the average level of development of the Community. Williamson (1965) had shown first that indeed, there is a convergence measured on national level, the price for which, however, is a growing differentiation among the regions. Suggested way of achieving cohesion is the catching-up of less developed regions and nations. When productivity or difference in GDP per capita is taken as the most important indicator for cohesion then catching-up could be achieved by a higher than average European Union GDP per capita growth in the catching-up economies. Hence, economic growth is the key to cohesion. Trade-off theories suggest that the most important trend in international economic co-operation is the hypothetical b (beta) convergence. Convergence depends on economic policy, created competitive advantages. These factors request thorough analysis of various aspects of competitiveness: setting proper ratio between overall and regional development, achieving high-level efficiency in state administration, supporting research and development, enhancing education on all levels, and last but not least, putting in place a well-functioning economic regulation and industrial policy. Concrete challenges for the Hungarian institutional system, regulation and international cooperation are also dealt with related to the above.