Thursday, April 30, 2009

The Coming Golden Age of New Europe?

I presented a paper on "The Coming Golden Age of Europe?" at an international conference on "1989-2029: 20 Years of Transition and Perspectives for Development of Post-socialist Economies", April 3-4 2009, Kozminski University in Warsaw (here is the shorter version in Powerpoint slides.

I got really excited about the subject (thought about it for some time already and finally found an excuse to write about it) and now am thinking about turning it into a book. I have a feeling that New Europe is underappreciated, particularly now during the crisis, by both the West and New Europeans themselves.

This is research in progress. Any comments/suggestions are very much welcome, either on the blog (preferably) or directly to my email

Here is an abstract of the paper:


New Europe has never had it so good before. Its income, quality of life, and level of happiness have never been closer to that of the developed countries in Western Europe. Despite the crisis, New Europe will continue to grow faster than Western Europe for decades to come, continuing its catching-up. By 2050, New Europe’s income per capita is likely to be almost equal to that of Western Europe, the highest level ever recorded in the history of the region. Moreover, the overall quality of life will be practically indistinguishable from that in Western Europe. New Europe’s true Golden Age will finally arrive.

By 2050, New Europe is also likely to achieve a higher level of income per capita than most emerging market countries. New Europe not only has stronger economic fundamentals, but is also less vulnerable than other emerging markets to political, social, and economic Black Swans, catastrophic events which could wipe out much of the achieved economic progress.

The Golden Age, however, will not arrive without help from policymakers. The crisis has shown that the current development model based on a rapid financial deepening fueled by imported savings intermediated by foreign-owned banks has lost some of its credibility. New development models are needed that would lessen reliance on financial deepening in favor of productivity growth, euro adoption, open borders to immigration, and further EU integration. The crisis provides a good opportunity for the needed change.

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