Catching Up and EU Accession - Conditions for Fast Real Convergence in the Candidate Countries

This is a report about the fifth workshop from the seminar series of IIASA’s Economic Transition and Integration Project entitled “The Process of EU Accession: Preparation by Learning and Exchange”. The workshop was held in Bratislava on 7-9 February 2002. The first two sections summarize the opening of the workshop and two introductory presentations dealing with economic policies of Slovakia on its way to the EU accession and the historical perspectives of growth, integration and recommended policies for catching-up in transition countries. The next section presents an outline of recent developments in the accession process in ten individual candidate countries. The fourth section concentrates on the analysis of factors determining savings and investments in accession countries and the role of banking intermediation, as illustrated on the case of Hungary. The fifth section is dedicated to questions of competitiveness – to the alternative ways of its measurement and policies that support exports and/or the ability of domestic producers to substitute imports, stressing that policies on the company and industry level are more important than national policies. The sixth section deals with the problems of macroeconomic financial convergence and the requirements on national performance for becoming a member of the European Monetary Union. Its first paper discusses alternative policies of central banks from Eastern and Central Europe for a smooth monetary integration of their countries with the euro-zone. Its second paper tests the empirical evidence on the speed of economic convergence in various transition countries. Its third paper analyses the aspects of the so-called nominal and real convergence and the potential scope of alternative monetary policies in accession countries in order to retain their external balance. The seventh section presents the summary of three presentations that dealt with international institutions. The first one is dealing with the policies and the support for catching up provided by the World Bank. The second paper describes the experiences of Ireland, Latvia and Estonia in preparing the national development plans and in the usage of structural and cohesion funds provided by the European Commission. The third paper concentrates on the problems of domestic agricultural policies and the EU Transfers, as based on the comparison of Slovakia with some other EU candidate countries and with the EU incumbents. The next two sections discuss the questions associated with the R&D, foreign direct investment, human capital and their spillovers. In the first of them the lessons from the Irish experience are summarized and compared with the present situation in accession countries. The paper, that follows next, analyses the data on education, compares the EU candidate countries with some less developed EU member countries and draws conclusion about policies for the human capital development and their association with growth. The last (tenth) section is based the on the comparative analysis of the empirical evidence from transition countries on the indicators of human development and the policies for a more comprehensive convergence of these countries to the levels of present EU member states.