Lessons learnt from past economic growth patterns and regional disparities in Central and Eastern European countries

Abstract

The Central and Eastern European (CEE) countries have undergone exceptional economic boom over the past two decades maintaining sustainable growth. The economic environment determines that in these countries GDP grew more rapidly compared to the core EU states implementing their continuous convergence, although some cyclical slowdown will be observed. Nevertheless, due to the rapidly changing, globalising business environment and the emerging unprecedented challenges linked to the constantly raising ratio of high added value content knowledge-based products and services, digitization era including many disruptive technological solutions, the shortcomings of the global supply and vendor chains, lack of materials and components in many industrial sector, the negative social and economic impacts of COVID-19 pandemic besides the unpredictable other events (e.g. outbroken war between Russian and Ukraine), the CEE countries have been forcing to restructuring their economies. This economic transformation process means making significant shift from the previous export-oriented, foreign capital inflow (FDI) attractive exogenous factors driven economic growth toward the endogenous, innovation and knowledge-based economy driven development to speed-up their catching up processes to the developed core EU member states changing the middle-income trap phenomenon. It means that due to raising of the labour workforce incomes the CEE countries cannot compete anymore with their exogenous, FDI attraction-oriented driven economic development model but they are weak yet for the time being to producing innovation-based, high added value content products and cutting-edge technologies improving their national economical competitive positions integrating on higher level in the global value chains. In order to overcome these difficulties and find the best, adequate solutions for the next time period 2021-2027, it is definitely need to analyse the past decade economic growth patterns and regional disparities of CEE countries. Despite all of them have to face the almost the same future challenges but their past economic structure have had different characteristics and reached the economic growth on different pathways due to their historical, social and economic background. The aim of this paper is to reveal the past economic growth patterns, development dynamics and the regional disparities in the CEE region and the possible reasons beyond that via comprehensive benchmark analysis.