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Looking Back, Looking Forward: Central and Eastern Europe 30 Years After the Fall of the Berlin Wall

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Looking Back, Looking Forward: Central and Eastern Europe 30 Years After the Fall of the Berlin Wall A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Grieveson, Richard et al. Research Report Looking back, looking forward: Central and Eastern Europe 30 years after the fall of the Berlin Wall wiiw Essays and Occasional Papers, No. 4 Provided in Cooperation with: The Vienna Institute for International Economic Studies (wiiw) - Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw) Suggested Citation: Grieveson, Richard et al. (2019) : Looking back, looking forward: Central and Eastern Europe 30 years after the fall of the Berlin Wall, wiiw Essays and Occasional Papers, No. 4, The Vienna Institute for International Economic Studies (wiiw), Vienna This Version is available at: http://hdl.handle.net/10419/213923 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu NOVEMBER 2019 Essays and Occasional Papers 4 Looking Back, Looking Forward: Central and Eastern Europe 30 Years After the Fall of the Berlin Wall Richard Grieveson (coordinator), Vladimir Gligorov, Peter Havlik, Gábor Hunya, Olga Pindyuk, Leon Podkaminer, Sándor Richter and Hermine Vidovic The Vienna Institute for International Economic Studies Wiener Institut für Internationale Wirtschaftsvergleiche Looking Back, Looking Forward: Central and Eastern Europe 30 Years After the Fall of the Berlin Wall RICHARD GRIEVESON (COORDINATOR) VLADIMIR GLIGOROV PETER HAVLIK GÁBOR HUNYA OLGA PINDYUK LEON PODKAMINER SÁNDOR RICHTER HERMINE VIDOVIC Richard Grieveson is Deputy Director at The Vienna Institute for International Economic Studies (wiiw). Olga Pindyuk and Hermine Vidovic are Economists at wiiw. Vladimir Gligorov, Peter Havlik, Leon Podkaminer and Sándor Richter are Research Associates at wiiw. Abstract To mark the 30th anniversary of the fall of the Berlin Wall, this paper aims to assess developments in Central, East and Southeast Europe (CESEE) over the past three decades, and to look forward to what the next 30 years might bring. First, we measure the convergence of per capita income, wages and life expectancy in CESEE with Western Europe since 1989, and examine demographic trends. We find that, after a difficult start, many countries have become significantly wealthier and their populations much healthier. However, for others, the outcomes of the first 30 years are less positive, and a large number of countries in CESEE have already experienced significant population decline. Second, our experts look back at the situation in 1989, and to what extent their expectations have played out, reflecting on both successes and disappointments. Third, we analyse current trends in the region, and attempt to project what will come next. Here, we focus on automation, digitalisation, institutions, demographics and geopolitics. We find evidence of institutional regression, demographic challenges, and a changing geopolitical backdrop which will have important implications for much of the region. However, we also see reasons for optimism, including the opportunities provided by digitalisation and automation, and an active civil society that could in time force positive change. Keywords: CESEE, Europe, Central and Eastern Europe, transition, convergence, demographics JEL classification: E00, E02, F02, J11, P20, P30, O52 CONTENTS 1. Introduction ...................................................................................................................................................... 1 2. Measuring economic and social developments since 1989 ........................................................ 4 2.1. Three phases of transition and convergence ...................................................................................4 2.2. Income convergence........................................................................................................................5 2.3. Demographic developments ............................................................................................................7 2.4. Life expectancy ................................................................................................................................8 3. Looking back: wiiw experts reflect on 30 years of transition .................................................. 11 3.1. Expectations and outcomes of transition .......................................................................................11 3.2. Ukraine: Taking stock of transition .................................................................................................13 3.3. Poland: wither illusions ..................................................................................................................16 3.4. Hungary: looking at early transition through the ‘reformer’s glasses’ ............................................18 3.5. Hungary and Romania: Radical transition had no alternative but could have been better managed ........................................................................................................................................21 3.6. Slovenia: Personal reflections........................................................................................................25 3.7. Building walls again? .....................................................................................................................28 4. Looking forward: The future of CESEE ............................................................................................. 33 4.1. Introduction: Thinking about the future of CESEE .........................................................................33 4.2. The new crisis is political: authoritarianism and institutional regression ........................................34 4.3. Demographic decline and automation ...........................................................................................40 4.4. Digitalisation, the intangible economy, and the future of work .......................................................43 4.5. The new world order and the place of CESEE ..............................................................................47 4.6. Conclusions ...................................................................................................................................51 References ...............................................................................................................................................53 TABLES AND FIGURES Table 2.1 / CESEE GDP per capita and gross wages per employee at PPP, 2018 .................................. 7 Table 2.2 / CESEE GDP per capita and gross wages per employee EUR at ER, 2018 ............................ 7 Figure 2.1 / Shock therapy: Real GDP, 1989 = 100, selected countries .................................................... 4 Figure 2.2 / The boom years: Real GDP, 2000 = 100, selected countries ................................................. 5 Figure 2.3 / Post-crisis: Real GDP, 2009 = 100, selected countries .......................................................... 5 Figure 2.4 / GDP per capita at PPP convergence against Germany ......................................................... 6 Figure 2.5 / Change in total population between 1989 and 2019, % ......................................................... 8 Figure 2.6 / Population by main regional groups, 1989 = 100.................................................................... 8 Figure 2.7 / Life expectancy at birth, 2017 ................................................................................................. 9 Figure 2.8 / Change in life expectancy at birth in years, 1989-2017 .......................................................... 9 Figure 2.9 / Relationship between per capita income and change in life expectancy .............................. 10 Figure 2.10 / Life expectancy at birth, years ............................................................................................ 10 Figure 2.11 / Life expectancy at birth, years ............................................................................................ 10 Figure 3.1 / Average population, thousand people .................................................................................. 13 Figure 3.2 / GDP per capita, EUR ............................................................................................................ 13 Figure 4.1 / V-Dem electoral democracy index, 0 = worst, 1= best ......................................................... 34 Figure 4.2 / Change in V-Dem electoral democracy
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