Academic journal article Review of European Studies

The Economies of the BELL Countries (Bulgaria, Estonia, Latvia and Lithuania) after Their EU Accession

Academic journal article Review of European Studies

The Economies of the BELL Countries (Bulgaria, Estonia, Latvia and Lithuania) after Their EU Accession

Article excerpt

Abstract

The acronym BELL stands for the 4 EU member countries from Central and Eastern Europe (Bulgaria, Estonia, Latvia and Lithuania) which are well known for their fiscal stability and low indebtedness. Being a representative of one of them (Bulgaria) the author of this article aims to follow the dynamics of their economic development after their accession to the EU. The special points of reference used are the compulsory convergence criteria each country wishing to join the Eurozone has to meet. Particular attention has been paid to the role of the exchange rate regime and the impact of the world economic crisis on the cycle model and the "corridor" marking the fluctuations of each of the interpreted macroeconomic indicators. The BELL's economic development has been opposed to that of the PIIGS countries, albeit only in terms of budget deficit (-) or surplus (+) and consolidated general debt as a percentage of GDP. The author has examined the role the European funds and programmes play for the economies of the BELL countries, some major benefits of their EU membership for their citizens and businesses, as well as the specific characteristics of the social activity aimed to overcome the effects of the crisis.

A variety of research methods have been used in the process, such as the scientific abstraction method (analysis, synthesis, induction and deduction), historic and systemic and logical methods, empirical and comparative analysis.

Keywords: EU, BELL, PIIGS, economy, currency board, world economic crisis

(ProQuest: ... denotes formulae omitted.)

1. Introduction

In May 2012 yet another acronym - "BELL" was added to the list of acronyms related to European issues. It was officially used by the well-known Polish economist Prof. Leszek Balcerowicz at a lecture at the London School of Economics - "The Eurozone's awkward threesome: fiscal stance, macroeconomic stability and growth" (Note 1). He uses the acronym to establish a relation among the fiscally stable EU countries from Central and Eastern Europe (CEE) among which are Bulgaria, Estonia, Latvia and Lithuania. The first letter of the countries' names produce the acronym, which will be used more and more often not only for the above stated reason, but it will be opposed to (just like Prof. Balcerowicz does) the other popular one - PIIGS (Portugal, Ireland, Italy, Greece, Spain). Unlike BELL, the acronym PIIGS is used to illustrate the opposite trend - a group of EU and Eurozone member states which show fiscal instability.

Bearing in mind the fact that currently not many countries in the European Union can be given as an example of fiscal stability and low indebtedness (especially countries in Central and Eastern Europe) and considering the importance of promoting this positive experience both within and outside the European Union, we aim at looking into the positive indicators of fiscal stability the four countries have in the context of their common economic development after joining the EU. It is quite understandable that the focus will be on Bulgaria since our personal observations of its economic development are thorough, direct and reliable.

2. Some Preliminary Notes

Prior to expressing our understanding about the reasons why it has become possible for Bulgaria, Estonia, Latvia and Lithuania to become members of the same group, we would like to point out that they bear a number of other similarities. For example, all four countries are former socialist countries and three of them (Estonia, Latvia and Lithuania) belonged to the former Soviet Union (Note 2), while Bulgaria was closely connected with it economically and politically (Note 3). From 1949 until 1991 these countries were members of the Council for Mutual Economic Assistance (CMEA), and from 1955 until 1991 they were members of the Warsaw Treaty Organisation (Warsaw Pact).

After leaving the Soviet Union and the recognition of their independence, Estonia, Latvia and Lithuania (Note 4) aimed at membership of a number of recognized European, Euro-Atlantic and world organizations, thus facilitating considerably their accession to the European Union. …

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