European Union moves eastwards

As Hungary prepares to enter the European Union, many economic lessons could be learned from the successes and failures of this “Tiger of Central Europe”. With an annual GDP growth rate of 5 to 7 %, sustained for the last three years, and a forecast deflation in essential goods forecast for the second half of this year, Hungary prepares with confidence the 29 dossiers which separates this country from full integration into the European Union. 75% of the country’s exports are already linked to EU countries. 17 of the 29 dossiers have already been closed and according to Janos Balla, Hungarian Ambassador to Portugal, Budapest thinks it can close all the dossiers by December 2002. It would then depend on the EU to decide whether the country could become a full member in 2003. Since the social, political and economic movements which swept through Eastern and Central Europe in 1989/1990, Hungarians begin to enjoy the quality of daily life they enjoyed before the changes took place. First, the macro-economic aspect improved and now, gradually, the micro-economy of the country gains competitiveness in the international marketplace. Like all Central and Eastern European countries, the labour force is highly qualified, which gives these countries advantages in the long term, if a brain drain can be avoided and if the excellence of the education systems in the past can be maintained, two big “ifs”. Raises of 80% in salaries for civil servants were phased over ten years. Ten years ago, per capita output was 7,700 USD per annum. Now, the figure is 11,000 USD/capita. The brain drain to western Europe has ceased : those who wanted to leave have already left. The most difficult dossiers are those of agricultural subsidies, regional and cohesion funds, environmental protection, competitiveness and customs policy. The question is to close these dossiers in a situation which suits both parties, not just the European Union. Otherwise, the new members will see their economies colonised, devastated and wholly violated, while their youth see their prospects disappear, as the prosperous, ordered life from before the changes in 1989 becomes an illusory dream.


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