Economic Policy in Central and Eastern Europe Since the 2008 Global Crisis

Beáta Farkas

The 2008 global crisis hit the Central and Eastern European EU member states severely and interrupted their relatively rapid convergence to the old EU member states' economic performance. After the years of crisis management the convergence has continued but at a slower pace. This paper investigates the economic policy responses of Central and Eastern European countries (CEECs) to this changed situation. Most of the countries follow the pre-crisis development path based on FDI inflows and neoliberal economic policy. This path provides development perspectives but perpetuates asymmetric mutual dependency between the core countries and CEECs. Since 2010 the Hungarian government has chosen a different policy stance with strong state intervention. Recently, the Polish government has introduced some similar economic policy measures. This paper analyses whether this new direction in economic policy is the consequence of special circumstances in Hungary and Poland or it addresses the constraints of the Central and Eastern European model of capitalism. Hungary regained its macroeconomic stability, which begs the question what made it possible: the success is the result of the economic policy which has strengthened the role of state or the result of one-off factors which do not recur. The comparison of economic performance and policy responses in CEECs highlights whether Hungarian experiences can be regarded as a sustainable alternative economic policy which can lead to a new institutional setting or if the development model -- able to overcome the constraints of the current capitalism model in Central and Eastern Europe - is still in the making.

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