Past and future reform challenges for CESEE and Europe at large

Abstract

How should we improve economic structures to ensure inclusive and sustainable growth in the European Union (EU)? This introductory chapter sketches important issues raised in the remainder of the book. It highlights strategies to facilitate Europe’s return to balanced growth and convergence, while also revisiting the transition experience of Central, Eastern and Southeastern European (CESEE) countries. Structural policies are seen as key to stimulating growth, ensuring monetary transmission and helping to create fiscal space. Ideally, reforms should also make public administration more efficient and include a supportive macroeconomic policy mix. Consequently, the European Commission has raised the idea of providing financial incentives for structural reforms. Moreover, institutional reform of Economic and Monetary Union is crucial for the resilience of the euro area. The chapter confirms that structural convergence among EU member states – in particular in the CESEE region – is well under way. During the transition process, many CESEE countries followed the advice of institutions that favoured a shock therapy as opposed to a gradual approach more in line with the European social model. Some of the reforms may have gone too far, which might explain why we have recently seen some policy reversals. So, future-oriented structural reforms require comprehensive packaging of reforms to reap the benefits intended.