Post-Crisis Growth and Development Slowdown of Central Eastern European Countries from the Middle-Income Trap Perspective

Abstract

There seems to be no compelling reason to argue that the financial crisis of 2007-08 has significantly contributed to the deepening of centre-periphery based development issues in the European Union. In current paper the post-crisis increase and development slowdown of Central Eastern European Countries - and from a broader perspective - the post-transition growth path of the region is examined. One of our main hypotheses is that the process of accession to the EU - by stimulating foreign investment to the region - has strongly contributed to the signifcant pre-crisis development and to the post-crisis persistent growth slowdown in Central Eastern European Countries. During the recent crisis, the above-mentioned nation states have been dealing with several socio-economic difficulties raising considerable financing needs towards the IMF. It can be assumed that the long-standing structural problems of the post-Soviet countries combined with the latest protracted recession have created a middle-income trap related situation in the examined region. In this paper, we are providing a brief review of the CEECs' development from central planning towards market economies state followed by a global economic outlook of the post-2008 growth. We are also analysing some middle-income trap episodes of the region focusing on the special case of Hungary's post-transition development path.