“Transforming the Transformation – Economic and Social Development in Central and Eastern Europe”
Organisateurs : Dr. Yaman Kouli, TU Chemnitz; Fraunhofer-Zentrum für Internationales Management und Wissensökonomie; Leibniz-Institut für Geschichte und Kultur des östlichen Europa.
The so-called transition countries achieved impressive growth rates in the aftermath of the shocks during the early 1990s. Until the economic crisis, the “way west” seemed to be open to these countries in economic terms. The expectation was that sooner or later, innovative and modern economies would develop which the majority of the working age population would then automatically benefit from. This expectation was in stark contrast to the employment history of a specific element of the workforce that had been forced to make personal sacrifices as a result of an economic policy they themselves hardly benefited from for several decades. Low national debts, increased productivity per capita and falling unemployment figures are therefore juxtaposed by a perceived increase of precarious employment opportunities, lower wages and the latent risk of job losses as a result of the structural change. This development can be observed even in Poland, the only European country that continued to grow throughout the crisis, as well as in many other countries.
In the short and medium term, the hopes for economic growth associated with this approach were fulfilled, and being the cheaper production location brought the transition countries far. Yet in view of the diminishing marginal utility of further international investments, which is also increasingly associated with political costs, it is progressively becoming necessary to develop new ways of generating economic growth. The most obvious way out is initially hardly surprising: The countries must manage to unlock new productivity reserves through innovations. Admittedly, several problems immediately arise at this point: Firstly, the central and eastern European countries are confronted by contradictory economic incentives, because even if there is no fail-safe way to create innovation-based economic growth, several influential levers are certainly well-known: Invest into academic education, research and development and also into the vocational training system. These measures are associated with higher government spending. However, whilst Germany invests almost 3 per cent of its GDP into research and development, Hungary only invests 1.4 per cent, and Poland only 1 per cent (2015 figures). Consequently, the taxes would have to go up. However, with such a measure, the countries that are catching up in economic terms would risk becoming less attractive to investors that continue to appreciate the comparatively low wage and employment costs. This perfectly describes the economic policy dilemma: On the one hand, it should be designed to maintain a financially attractive economic regime and on the other, the respective countries are under pressure to aim for a knowledge-based system. Moreover, social policy should invest more to cultivate the investment in human capital. However, this could deter possible foreign investors since such a policy often leads to higher costs. The central and eastern European countries are therefore caught in the “middle income trap”: This term refers to the development stage where countries are no longer cheap enough to be able to compete with low labour cost countries but at the same time, their domestic and employment markets as well as their level of innovations are not yet developed enough to justify higher wages.
Nominally, the advantages of a more innovation-driven economy are obvious. Firstly – this has been indicated by works with an economic geography focus, for example – knowledge-based companies are less mobile than companies that rely largely on semi-skilled labour. This reduces the risk of such companies choosing the exit option and deciding to shift to a “cheaper” country with little effort. Secondly, a better qualified workforce is usually associated with higher wages and therefore with an increase in domestic demand, which can be a stabilising element. Thirdly, there is the realistic chance that it can at least mitigate the ongoing emigration of qualified workers.
The conference has three goals. First, we want to highlight the different aspects of the economic transformation since the 1990s. Second, we want to calculate the political costs for the “economic success story”. Is there a link between the high popularity of populist parties and the economic and social policy? Third, we want to discuss the different options to further develop the national social and economic policies as well as the question, whether there is a universal solution, or whether it is necessary to develop individual strategy for every country.
16:00 Riad Bourayou, Research Manager, Fraunhofer Center for International Management and Knowledge Economy IMW
Yaman Kouli / Dirk Böttner-Langolf / Uwe Müller
16:30 Hans-Jürgen Wagener, European University Viadrina Frankfurt (Oder): Economic Transformation in Eastern Central Europe – A Success Story
Panel: Economic Predicaments in Central and Eastern Europe
17:45 Dagmara Jajeśniak-Quast, European University Viadrina Frankfurt (Oder): Precarious Work in Poland – a Stocktaking
9:30 Yaman Kouli, UMR Sirice, Paris: Poland’s Communist Heritage
10:15 Christian Schweiger, Chemnitz University of Technology: East-Central Europe During the Financial Crisis
Panel: Social Policy Perspectives in Central and Eastern Europe
11:15 Dragos Adascalitei, University of Sheffield: Romania’s labor market in the aftermath of the economic crisis
13:30 Martin Krzywdzinski, WZB Berlin Social Science Center: What are “Good Jobs”?
14:15 Bela Galgoczi, ETUI, Brussels: Condemned to be left behind? Catch-up strategies for CEE countries
Panel: EU-Membership: Burden or Opportunity?
15:30 Friedrich Thießen, Chemnitz University of Technology: Corruption and Financial Distress in Europe
16:15 Kiril Kossev, OECD Paris: Political and Economic Integration of Central and Eastern Europe with the Western Economies
Panel: Islands of Economic Success
17:30 Marcin Piątkowski, World Bank, Peking: Europe’s Growth Champion. Insights from the Economic Rise of Poland
9:30 Steffen Preissler, Fraunhofer Center for International Management and Knowledge Economy IMW, Leipzig: Bulgaria – A Role Model for Technological Success?
Panel: Socio-economic Development Prospects
10:15 Birgit Glorius, Chemnitz University of Technology: Return Migration, Transnational Entrepreneurs and Social Remittances – Alternative Tools for Socio-economic Development
11:30 Ádám Zoltán, Corvinus University of Budapest: Economic Policies of Authoritarian Populism – the Case of Hungary
12:15 Andrea Filippetti, Italian National Research Council:
European Convergence: Is the Dream Over?
Dr. Yaman Kouli