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The second transition: Eastern Europe in perspective

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  • Stefania Fabrizio
  • Daniel Leigh
  • Ashoka Mody

Abstract

This paper studies the global trade and financial market integration of the countries in Eastern Europe. The countries of Eastern Europe achieved two remarkable transitions in the short period of the last two decades: from plan to market and, then, in the run-up to and entry into the European Union, they rode a wave of global trade and financial market integration. Focusing on the second transition, this paper reaches three conclusions. First, by several metrics, East European and East Asian growth performances were about on par from the mid-1990s; both regions far surpassed Latin American growth. Second, the mechanisms of growth in East Europe and East Asia were, however, very different. East Europe relied on a distinctive—often discredited—model, embracing financial integration with structural change to compensate for appreciating real exchange rates. In contrast, East Asia contained further financial integration and maintained steady or depreciating real exchange rates. Third, the ongoing financial turbulence has, thus far, not had an obviously differential impact on emerging market regions: rather, the hot spots in each region reflect individual country vulnerabilities. If the East European growth model is distinctive, is it sustainable and replicable? The paper speculates on the possibilities.

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Bibliographic Info

Paper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 366.

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Length: 35 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:euf:ecopap:0366

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Related research

Keywords: Growth; Transition; Trade; Financial Integration; The Second Transition: Eastern Europe in Perspective; Economic Papers;

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Cited by:
  1. Emil Panusheff, 2011. "The effect of the milieu and the financial crisis on the economic stability of the EU Member States," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 64-80.
  2. Ruben Atoyan, 2010. "Beyond the crisis: revisiting emerging Europe’s growth model," Financial Theory and Practice, Institute of Public Finance, vol. 34(4), pages 329-356.
  3. Winkler, Adalbert, 2010. "The Financial Crisis: A Wake-Up Call for Strengthening Regional Monitoring of Financial Markets and Regional Coordination of Financial Sector Policies?," ADBI Working Papers 199, Asian Development Bank Institute.
  4. Marcin, Piatkowski, 2009. "The Coming Golden Age of New Europe," MPRA Paper 19523, University Library of Munich, Germany.

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