Monthly Report No. 2/2025

Chart of the month Military spending in Europe on the rise by Andreas Lichtenberger Opinion Corner What can other countries learn from Poland’s transition experience? by Grzegorz W. Kolodko In times of great turbulence in the world and the European economies, it is worth looking at the example of the greatest European success in development policy Poland over the last three decades. Furthermore, Poland is still the fastest-developing country in Europe. It is worth looking at what policy mistakes were committed and how the country’s success came about. Others could benefit from this knowledge. The European Union after the Draghi Report Too powerless to reform by Hubert Gabrisch In light of the emerging conflict between the US and China, the Draghi Report describes a catastrophic state of innovative capacity in the European Union. The reaction of the European Council and the Commission offers little hope that this state of affairs can be properly rectified. US tariffs on Canada, China and Mexico and their effect on Central and Eastern Europe by Javier Flórez Mendoza and Oliver Reiter We use a state-of-the-art trade model to estimate the effects of a trade war initiated by the US against Canada, China and Mexico, as well as possible implications for the countries of Central and Eastern European of retaliation by those three countries. We find that while positive welfare effects are possible, those would be due to rising tariff revenues; real wages, however, are always lower compared to the situation without a trade war. Monthly and quarterly statistics for Central, East and Southeast Europe