The EU and Central Europe: The Remaking of Economic Relationships

Abstract

The reconstruction of economic relationships between Central Europe and the EU since 1989 has involved a major redrawing of the economic map of Europe. This paper investigates these relationships in the case of the V4 countries, disaggregating, wherever possible, the Czech and Slovak components of Czechoslovakia – prior to the ‘Velvet Divorce’. The analysis considers four main axes of change: stabilisation and privatisation, the reinternationalisation of international trade, foreign investment, and research and development. This leads to a consideration of how these changes are influencing the prospects and challenges of potential membership of the EU. Stress is placed throughout on how application of the ‘sharp shock’ model of economic transition is influencing the emergence of the new economic map of Europe. Comparisons with Southern Europe in the 1980s are particularly instructive in terms of understanding both the challenges of membership and of the changing approaches of the EU to enlargement.