Academic journal article Economics & Sociology

The Introduction of the Euro and Central Europe

Academic journal article Economics & Sociology

The Introduction of the Euro and Central Europe

Article excerpt

Theoretical frameworks

Every integration body sets specific conditions or criteria for membership for those who wish to join it. This largely constitutes the issue of integration maturity of a given country or group of countries (the integration maturity was the focus of research conducted by a research group from the Department of World Economy at Corvinus University of Budapest in a program financed by the Hungarian National Research and Development Plan between 2002-2004 (see Palankai, 2004, 2005, and 2014). It can be shown that this maturity embeds a number of factors, as well as the level of integration and the type of the countries which wish to integrate.

The integration maturity question is posed in connection with the increasingly close forms of integration and the agenda of the Economic and Monetary Union (the so-called 'positive integration'). The outcomes have clearly demonstrated that integration maturity cannot be left out of consideration. Even though market liberalization ('negative integration') always have consequences, they remain largely unilateral and asymmetric (meaning that the less-developed and weaker partners could lose more than win) and the retroactive effects are not revealed in an obvious manner. As the history of European integration showed, the question of unequal division of advantages was addressed either by asymmetric trade liberalization or financial transfer in favor of weaker partners (asymmetric associations).

The situation changed with the Economic Union. The reciprocal effects became direct and more thorough. The economic problems of the less developed partners (e.g. budget deficit or regional inequalities) impact the economy of the more developed partner and can cause disturbances (e.g. by triggering inflation) in a more direct way. Thence, any decision to join an economic union brings about fundamental effects on the institutional and political structure of the country in question. With regard to this, maturity or preparedness for integration is an issue that has to be examined and is therefore a matter of common interest.

Yet another reason was the aspiration for full EU membership of the Central and Eastern European countries. In their case, considering the huge differences in development and the unprecedented number of CEE candidates wishing to join the EU at once, it became clear to the EU policy-makers that the EU Enlargement would have more far-reaching consequences that previously envisaged.

Due to the above, in the early 1990s the EU had to set two types of accession criteria, which assumed a certain level of integration maturity in the given context. In 1991, the Maastricht criteria formulated the basic stability conditions for joining EMU. In 1993, the Copenhagen criteria set the requirements for EU membership for CEE candidates. The Copenhagen Criteria attempted to formulate a certain desirable minimum transformation for these countries, while it already referred to the requirement of participation in the Single Market.

In our paper, we concentrate on economic aspects of integration maturity, although political, social, and particularly institutional and policy aspects cannot be left out. In the case of monetary integration, such institutional questions as independence of central bank or public acceptance of yielding national sovereignty are equally important. In relation to the monetary integration the following basic economic criteria of integration maturity should be mentioned:

* Achievement of a certain state of integration of real-economy (integratedness);

* Market economy ("functioning");

* Competitiveness (structural and development aspects);

* Macro-stability and stabilization (most of all meeting of Maastricht convergence criteria);

* Convergence (nominal or real);

* Integration (absorption) capacities of the Union.

Therefore, we argue that apart from the fulfilment of Maastricht convergence criteria, the candidate countries should meet several structural, institutional or political requirements of integration maturity. …

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