72nd International Atlantic Economic Conference

October 20 - 23, 2011 | Washington, USA

Macroeconomic impacts of the EU-membership in the NMSs: nominal and real convergence

Sunday, 23 October 2011: 9:40 AM
Viktoria Vasary, Ph.D. , Department of International Economics, University of Pannonia, Veszprém, Hungary
Peter Halmai, DSc , Department of International Economics, University of Pannonia, Veszprém, Hungary
Macroeconomic impacts of the EU-membership in the NMSs - Nominal and Real Convergence Trends

The study is aimed at systematizing the main macroeconomic impacts of the EU accession in a theoretical way. It analyzes - besides the trade integration and the relation to the common budget which are considered direct impacts of the accession - the broader financial and real economic impacts of the EU adaptation.

Among the financial impacts mainly the change in the budget and the current account and the fulfillment of the nominal convergence criteria are analyzed.

As regards the real economic impacts the employment, the economic growth, the change in the competitiveness (real exchange rate and the unit labour costs), the factor flows and comprehensively the real convergence are revealed.

It is proved by the study, that the macroeconomic impact of the adaptation is reflected in a synthetizing way by the category of the sustainable convergence. Its criteria are: permanent real convergence with simultaneous fulfillment of the nominal convergence criteria. The analyses carried out prove, that the convergence from 2004 to 2008 based on a rapid growth was not sustainable, it was mainly based on the increase in domestic demand and the significant deterioration in the external balance. After 2008 the global economic crisis hit also the new Member States.

The study analyzes the growth performances of the new Member States, the contribution of individual factors to the economic growth in details by means of the methods of the growth accounting. The slowdown in the economic growth of the new Member States seems to be persistent. At the same time this slowdown might result in a convergence crisis, the catch-up process might come to a halt and the new Member States might even diverge from the EU 15.

The successful Post-Lisbon Strategy and the recovery of Europe definitely require that the growth crisis in the new Member States have to be overcome.