This month, one of the great achievements of European integration is celebrating its 20th anniversary, 35 years after the fall of the Soviet bloc. In May 2004, 10 countries joined the European Union (EU), mainly from Central and Eastern Europe. Over this period, the average gross domestic product (GDP) per capita of these new members rose from 52% to almost 80% of the EU average, while unemployment rates fell from 13% to 4%.
In its new economic forecasts published on Wednesday, May 15, the European Bank for Reconstruction and Development (EBRD) considered the economic performance of eight of these countries: Poland, Czech Republic, Slovakia, Slovenia, Hungary, Estonia, Latvia and Lithuania.
“Their GDP per capita has risen from 14% of Germany’s in 1995 to 26% in 2003 and 50% in 2023,” said Beata Javorcik, chief economist for EBRD, an institution created in 1991 to support economic transition of the post-Soviet space. Bulgaria and Romania have also more than tripled their per capita income in proportion to Germany’s (from 10% to around 30-35%) since joining in 2007.
Open to international trade
Part of this catching-up is linked to entry into the market economy and the democratic transition that began after the fall of the Berlin Wall. To what extent has EU accession subsequently accelerated this phenomenon? To measure this, the EBRD compared the growth trends of the new members with a group of countries with a similar profile, but which did not join the EU, such as Moldova, Kazakhstan or the Western Balkans.
The result: “Of 24 percentage points of convergence observed between the eight new members and Germany since 2003, 14 points can be attributed solely to the effects of European integration,” explained Javorcik. This “bonus” has been achieved through several channels. Firstly, economic and political reforms which promoted transparency and attracted increasing amounts of foreign investment, even before accession. “Integration into the European single market has also contributed to upscaled exports to the rich countries of Western Europe,” added the economist.
Above all, these economies have opened up widely to international trade, particularly with the installation of automotive subcontractors in Western Europe. The share of exports in the GDP of these countries has risen from 43% in 1995 to 49% in 2003 and 76% in 2023. This proportion even rises to 92% for Slovakia, which is particularly integrated into German production chains. This exposure to the German economy, which has been mired in stagnation for several months, explains why growth in Central Europe and the Baltic States was particularly weak in 2023 (0.1%).
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