Letter: Central and eastern Europe struggle to achieve convergence


You are surely right to judge that post-communist central and eastern Europe (CEE) has benefited from joining the EU (“Two decades on, the EU needs a new Big Bang enlargement”, FT View, May 4). But in effecting to balance the arguments you downplay the negatives now set to shape the region’s future.

Central and eastern Europe’s disastrous demographics are exacerbated by the gift of 10mn migrants to the west. Croatia lost almost a quarter of its people. Romania, Bulgaria and the Baltic three saw a fifth of workers go, Poland “merely” a tenth. The vast human drain was compounded by real costs. Poland’s emigrants carried €160bn worth of education “embedded” in them (as per OECD figures). Net transfers since Poland joined the bloc in 2004, at €163bn to end of March 2024, have only now begun to compensate.

The EU of course forbade protectionist industrial policies, so central and eastern European countries could not emulate the likes of South Korea and Taiwan and grow domestic multinationals. Instead, foreigners own most of large-scale industry and services in these countries. In Poland, they run over half of modern manufacturing and retailing.

Non-locals account for half of Czech and Polish industrial exports. In Hungary, it is four-fifths.

Value added generated in central and eastern Europe disproportionately accrues to outsiders. The region’s “branch economies” depend on weak domestic SMEs (small and medium-sized enterprises) for their research and development, which unsurprisingly is minuscule in scale. The individual GDP per capita of such countries may seem decent. Poland, for example, is at four-fifths of EU levels. But given the dependent status of the region’s economies, the struggle to get to the level of the EU average will be tough enough. To get to north-west Europe’s productivity and income level seems well-nigh impossible.

Maciej Olex-Szczytowski
Warsaw, Poland



This article was originally published by a www.ft.com . Read the Original article here. .