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Index

absorption rates 21–2, 23, 149 ‘blended’ funding 4, 111, 117 access to financing 41–2 BOJ (Bank of Japan) 76 acquis communautaire 65 boom–bust cycles 35, 54, 171 Action Plan for the Circular Economy Boston Consulting Group 14 93 Bratislava Declaration (2016) 109 added value (EU budget) 92, 101–3 Brazil 124 Brexit 96, 101, 102–3 Brexit 2, 66, 67, 72, 81, 96, 101, 102–3, cohesion policy 93, 94 107, 110 common agricultural policy 93–4, 99 BRI (Belt and Road Initiative) 69 EU expenditures 93 budgetary guarantees 106, 111, 112, European Commission proposal 96, 114, 118–19 98–101 building stock 141, 142–3 external action 94–5 Bulgaria 4–5, 56–62, 136, 145 options to strengthen 92–6 Bulgarian National Bank 59 own resources reform 95–6, 97, 101, burden-sharing 83 102–3 research and cross-border capacity utilization 135, 141 infrastructure 94 capital accumulation 15, 20, 29–30, 37, taxation 95–6, 97, 101, 102–3 39–43, 49 adverse self-fulfilling equilibria 77–8 capital markets union 8, 19–21, 24, advisory services 113 162, 168 ageing workforce 124, 128, 130–32, capital-preserving investments 138–40 133 capital stock 10, 12, 39–40, 171 Agenda 2030 for Sustainable investment gaps 136, 138, 139, 140, Development 93 141, 143, 152 AGS (Annual Growth Survey, capital-to-output ratio 136, 138 European Commission) 163–4 catalytic effect (of financial alternative finance 20 instruments) 112 artificial intelligence 14, 118 catching-up 3–4, 5–6 Asset Purchase Programme 4 fostering convergence (EU’s role) 8, Athens 73–4 9, 13, 18, 19 Atoyan, R. 44 role of monetary policy see under austerity 69, 168, 172 monetary policy Austria 2, 84 CCCTB (Common Consolidated Austrian School of Economics 6 Corporate Tax Base) 101, 102 CEB (Council of Europe Development Baltic region 29–36, 38–9, 40–41, 43–9, Bank) 118 131–2 CEE (Central and Eastern European) Banking Union 56–9, 60, 61, 62, 70 regions 12, 16, 57, 81–2, 85, 160 beggar-thy-neighbour effect 68, 69, 168 monetary policy and catching-up ‘black zero’ policy 172 29–30, 31–4, 36, 38–41, 43–9

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CEF (Connecting Europe Facility) sustainable convergence 28, 36, 114, 116 37–49, 51–2, 54 CESEE (Central, Eastern and ‘convergence club’ 52 Southeastern European) region Convergence Reports (ECB) 56 fostering convergence (EU’s role) 8, corporate tax cut (US) 69 10–14, 15, 17–18, 20–21, 22 corruption 49, 84–5, 89 funding European solidarity 2, 3, COSME (Competitiveness of 4, 6 Enterprises and SMEs) investment gaps see investment gaps programme 114 monetary policy and catching-up see credit flows 30–31, 36 monetary policy and catching- credit growth 30, 34, 35–6, 37, 49 up credit ratings 77 CF (Cohesion Fund) 87, 148 crisis management 72–3, 75–8 China 20, 68, 69 Croatia 32, 33, 35, 166 climate change 13, 66, 67, 86, 92, 106, Czech Republic 84, 85, 145, 150 109, 120 cohesion debt relief 70 added value (EU budget) 93, 94, 96, ‘debt-brakes’ 172 98, 99 debt-to-GDP ratio 57, 58–9, 172 fostering convergence (EU’s role) 8, deindustrialization 123, 124–7, 129, 15, 21–3 133 funding European solidarity 3–4 Delian League 73–4, 78 policy see cohesion policy Delos 73, 74 trust and goodwill 72, 73, 74, 78 deregulation 165, 166, 167 cohesion policy 21, 68, 93, 94 Digital Single Market 19 financial instruments 107–8, 118 digitalization 18–19, 133 financing see financing cohesion divergence 52, 147, 151, 152, 173 policy Domar, E. D. 136 investment gaps 148, 152–3 policy transfers 81–2, 83 EAFRD (European Agricultural Fund Cold War 65 for Rural Development) 87 CAP (common agricultural policy) EBRD (European Bank for 93–4, 99, 107, 108 Reconstruction and Development) Common Market 64 39–40, 118 CompNet (Competitive Research ECB (European Central Bank) 4, 19, Network) 18 70 convergence Bulgaria’s monetary policy 56, 60, 61 current state of 8–12 euro crisis 75, 76, 77–8 deindustrialization 123, 124, 125, Governing Council 4, 60 133 impact of monetary policy on EU’s role in fostering see fostering economic convergence 51 convergence (EU’s role) investment environment 162–3, 171, funding European solidarity 3–4 172–3, 176 impact of monetary policy on monetary policy and catching-up economic convergence 51–5 34, 36–7 investment gaps 147, 148, 150, 151–3 EFSI (European Fund for Strategic nominal see nominal convergence Investments) 22, 87–90, 113–17, real convergence see real convergence 118–19, 175 strengthening see strengthening EIB (European Investment Bank) economic convergence 87–8, 176

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financial instruments 109, 113, added value (EU budget) 96, 114–16, 118, 119–20 98–101 investment gaps 135, 139–43, 152 financial instruments 110, 114, 116, EIBIS (EIB Investment Survey) 135, 118–20 139–43, 152 fostering convergence (EU’s role) 19, EIF (European Investment Fund) 115 22–3 EMFF (European Maritime and investment environment 163–4, 169, Fisheries Fund) 87 172 emigration 37, 44, 124, 147 Multiannual Financial Frameworks employment share 126–7, 129 see MFFs EMU (Economic and Monetary European Court of Auditors 88–9 Union) 2, 5, 160–61, 175 ‘European data economy’ 19 environment protection (structural European Deposit Insurance System 5 indicator) 143, 144–5, 147, 148– European Innovation Scoreboard 51, 152–3, 158, 159 (EIS) 18, 48 EPL (employment protection European Investment Stabilisation legislation) 165, 168, 169 Function 5 ERDF (European Regional European Stability Mechanism 5 Development Fund) 87, 148 exchange rate regimes 3, 5, 33–4, 52, ERM II (Exchange Rate Mechanism) 53–4, 128 17, 56–9, 60, 61–2 fixed exchange rates 56, 57, 168 ESCB (European System of Central see also ERM II Banks) 18 ESF (European Social Fund) 87, 148 Fazekas, M. 84, 85 ESIF (European Structural and FDI (foreign direct investment) 11, 12, Investment Funds) 114, 119, 13, 15, 41 135–6, 144, 148–52, 153, 156–9 Federal Reserve System (US) 36, 76 Estonia 145 financial instruments (FIs) 106–7, 120 ETS (Emissions Trading System) 96 budgetary guarantees 106, 111, 112, EU budget 114, 118–19 added value see added value EU budget dilemmas and challenges budgetary guarantees 106, 111, 112, 107–11, 120 114, 118–19 European Commission 110, 114, financial instruments see financial 116, 118–20 instruments European Fund for Strategic financing cohesion policy see Investments 22, 87–90, 113–17, financing cohesion policy 118–19 role in catching-up 5–6 financing cohesion policy (EU strengthening economic convergence budget) 86–7, 89 66, 67 innovation 109–10, 114, 115, 116, sustainability orientation 93–4, 95–7, 118, 120 103 InvestEU Fund 117–20 euro (currency) 5, 33–4, 51–2, 73, 168 investment gaps 109, 111, 116, 117, Bulgaria’s adoption approach 56–62 120 euro crisis 72, 75–7 market failures 106, 111, 112, 114, strengthening economic convergence 115–16, 117, 120 67, 69–70 Multiannual Financial Framework Eurogroup 5 2021–2027 106–7, 109, 110, 117, Europe 2020 strategy 101 119, 120 European Commission 70, 88 use/usefulness of 111–13

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financing cohesion policy (EU budget) investment gaps 148, 152–3 81 monetary policy and catching-up 29, corruption 84–5, 89 30, 33, 37, 38, 41 European Fund for Strategic strengthening economic convergence Investments 87–90 65 financial instruments 86–7, 89 Germany 45, 46–9, 77, 84, 124 ‘Juncker Plan’ 87–9 investment environment 173–4 new own resources 82–4 strengthening economic convergence policy transfers 81–2, 83 65, 69–70 reduction in funding 81–2 Global Competitiveness Index 48 solutions 86–7, 89–90 Global Competitiveness Report (WEF) taxation 82, 83, 84, 85, 90 45 unemployment 81–2 global financial crisis 2, 9–10, 123 Finland 124 investment environment 160, 171–3 Fintech funding platforms 21 investment gaps 136, 138–40, 148 ‘first demographic dividend’ 131 monetary policy and catching-up 28, First Republic of Austria 2 31–7, 39 Fiscal Compact 172 strengthening economic convergence fiscal stress 76–7 65–6, 69–70 fiscal transfers 69–70, 77–8 global value chains 11, 12–15, 37, 47 fixed exchange rates 56, 57, 168 GNI (gross national income) 82, 94–5, flexible monetary policy 53–4 96, 98, 99–100, 107, 110, 148 fostering convergence (EU’s role) 8, Golden Wage Rule 175 23–4 goodwill 72, 73, 78 capital markets union 8, 19–21, 24 Goos, M. 128 catching-up 8, 9, 13, 18, 19 Governing Council (of ECB) 4, 60 current state of convergence 8–12 Great Depression 2 EU funds 21–3 Greece 69–70, 73–4, 136 foreign direct investment 11, 12, 13, gross fixed capital formation 136, 152, 15 161–2, 170, 173 GDP per capita 8–9, 10, 11, 17, 18, Guidelines on Corporate Governance 21–2 of State-Owned Enterprises global value chains 11, 12–15 (OECD) 60 increased investment spending 67–70 innovation 10, 15, 16, 17–18, 19–20 Harrod, R. F. 136 institutional quality 17, 21–3 Heinemann, F. 93 Single Market 8, 15–19, 24 HLGOR (High Level Group on Own total factor productivity growth 10, Resources) 101 11, 12–15, 16 Horizon 2020 programme 93, 98, 99, France 138 114 human capital 45–6, 123, 143, 144–5, Gagliardi, L. 94 147, 148–51, 152–3, 157 Gallup World Poll 128, 130 Human Capital Index (HCI) 45–6 GDP (gross domestic product) per Hungary 35, 84, 85 capita ageing workforce 128, 130 ICT (information and communication fostering convergence (EU’s role) technology) 133, 135, 144–5, 147, 8–9, 10, 11, 17, 18, 21–2 148–51, 152–3, 159 impact of monetary policy on IFIs (international financial economic convergence 51–2 institutions) 118

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IIP (international investment position) European Structural and Investment 31 Funds 135–6, 144, 148–52, 153, IMF (International Monetary Fund) 156–9 40, 46, 53, 75, 165, 169 financial instruments 109, 111, 116, inflation 3, 4, 58, 75 117, 120 impact of monetary policy on global financial crisis 136, 138–40, economic convergence 52, 148 53–5 locating structural investment needs investment environment 172–3, 175, 143–7 176 monetary policy and catching-up innovation 5–6 42–3 financial instruments 109–10, 114, ‘optimal’ investment levels 135, 136, 115, 116, 118, 120 138–9, 152 fostering convergence (EU’s role) 10, quantifying 136–43 15, 16, 17–18, 19–20 structural indicators 143–5, 147, investment gaps 143, 144–5, 147, 148–53, 156–9 148–51, 152–3, 157–8 investment performance 160–62 monetary policy and catching-up investment ratios 13, 37, 39 45, 47–8 investment-to-output ratio 138 institutional quality 17, 21–3, 29, 33, IPE (Investment Plan for Europe) 114 47, 49, 60 Iran 69 interest rates 3, 4, 52, 54, 58, 76, 78, 86 Issing, O. 51 investment environment 164, 172–3 Italy 77 monetary policy and catching-up 34–5, 37, 49 Japan 166 InvestEU Fund 117–20 job polarization 123, 128, 133 investment environment 160, 175–6 ‘Juncker Plan’ 87–9 alternative lenses 170–75 global financial crisis 160, 171–3 Kaldor, N. 136 gross fixed capital formation 161–2, Keen, M. 95 170, 173 King, L. P. 84, 85 investment performance in Europe King, M. 53 160–62 Koll, W. 175 labour market 164–5, 168, 169, 174 Krugman, P. 10 market-oriented structural reforms 164–70, 175–6 labour market monetary policy 162–3, 168, 171–3 ageing workforce 124, 128, 130–32, net fixed capital formation 163, 171 133 private and public sector investment deindustrialization 123, 124–7, 129, 170–72, 175–6 133 productivity 161–2, 163, 166–7, 169, investment environment 164–5, 168, 172, 173 169, 174 reform–investment link 167–70 job polarization 123, 128, 133 supply-side structural reforms 160, labour force participation rates 44, 162–4, 174–5 128, 130–31 investment gaps 6, 135–6, 152–3 monetary policy and catching-up 37, capital stock 136, 138, 139, 140, 141, 44–6, 47, 48, 49 143, 152 LABREF (labour market reform) EIB Investment Survey 135, 139–43, database 165 152 Latvia 138, 145

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Lehman Brothers 2 global financial crisis 28, 31–3, 39 leverage effect (of financial increasing productivity 28, 29–30, instruments) 112 37, 42, 44, 45, 46–9 LGTT (Loan Guarantee Instrument innovation 45, 47–8 for Trans-European Transport interest rates 34–5, 37, 49 Network Projects) 113 investment and capital liberalization 53, 165–7, 169 accumulation 29–30, 37, life expectancy 44, 131, 157 39–43, 49 light inflation targeting 53, 54–5 labour market 37, 44–6, 47, 48, 49 LLR (lender of last resort) 70 post-crisis recovery 33–7 ‘lowflation’ 75 private sector credit/debt 32, 34, 36–7 Maastricht criteria 3, 33, 51, 52, 56, 58 real convergence 28–33, 42, 47, 49 Macedonia 5, 32, 33 Romania 51–5 Machlup, F. 6 total factor productivity 30, 37, 45 Macroeconomic Imbalance Procedure Montenegro 9, 10, 35 172 ‘Made in China 2025’ programme 68 Naldini, A. 84 Manning, A. 128 National Bank of Romania 53–4 market failures 87, 106, 111, 112, 114, NAWRU (non-accelerating wage rate 115–16, 117, 120 of unemployment) 174 market-oriented structural reforms neoclassical growth models 8, 136, 164–70, 175–6 138–40 MFFs (Multiannual Financial net fixed capital formation 163, 171 Frameworks) new own resources 82–4, 95–6, 97, 101, 1993−1999 87, 96 102–3 2000−2006 87 nominal convergence 3, 33, 52, 55 2007−2013 82, 87, 93, 113 Bulgaria’s monetary policy 56, 57–8, 2014–2020 5, 82, 87, 92–3, 96, 59, 61, 62 99–100, 108, 114 NPBIs (National Promotional Banks 2021–2027 5, 81, 82, 90, 92, 93, 96, and Institutions) 116, 118, 119 99–100 NPLs (non-performing loans) 35 financial instruments 106–7, 109, 110, 117, 119, 120 OECD (Organisation for Economic migration crisis 72, 109 Co-operation and Development) monetary policy 45, 60, 133, 165, 169 diverse monetary union 75–6 Official Development Assistance 94–5 flexible 53–4 old-age dependency ratios 131–2 impact on economic convergence ‘optimal’ investment levels 41, 135, 136, 51–5 138–9, 152 investment environment 162–3, 168, Ostry, J. D. 169 171–3 own resources 5 role in catching-up 4–5, 28, 49 added value (EU budget) 95–6, 97, Bulgaria 56–62 101, 102–3 credit flows 30–31, 36 financial instruments 107–8, 112 credit growth 30, 34, 35–6, 37, 49 financing cohesion policy (EU faster and sustainable convergence budget) 82–4 28, 36, 37–49 GDP per capita 29, 30, 33, 37, Paris Climate Agreement 101 38, 41 Payment Services Directive (PSD2) 20

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peak industry employment 125, 126 Regional Economic Issues Report Peloponnesian War 74 (IMF, May 2016) 40 Penn World Tables 138–9 revolving nature (of financial Percoco, M. 94 instruments) 112 PIAAC (Programme for the robotics 14 International Assessment of Adult Romania 4–5, 136, 145 Competencies) 133 impact of monetary policy on plastic tax 101 economic convergence 51–5 Poland 32, 33, 64–5, 124, 126 Rome Declaration (2017) 109 populism 2, 4, 66 Romer, P. M. 136 Portugal 136 RSFF (Risk-Sharing Finance Facility) positive-sum effect 68 113 PPS (purchasing power standards) 29 privatization 30, 165 Savelin, L. 44, 47 Product Market Indicator data saving rates 29, 40, 41 (OECD) 165 Second Republic of Austria 2 product market regulation 166, 167 SEE (Southeastern European) region productivity 94, 106, 125–6 29–34, 36, 38–41, 43–9 financing cohesion policy (EU self-assessed health data (Gallup World budget) 18–20 Poll) 128, 130 investment environment 161–2, 163, single bidding 84, 85 166–7, 169, 172, 173 Single Market 8, 15–19, 24, 64, 92, 162, monetary policy and catching-up 28, 165–6 29–30, 37, 42, 44, 45, 46–9 Single Resolution Fund 5 total factor productivity see TFP Six Pack 172 progress 53 Slovakia 136 Slovenia 35, 48, 136, 145 QE (quantitative easing) 76 real convergence after global financial crisis 32, 33 R&D (research and development) 42, SMEs (small and medium-sized 109, 113 enterprises) 5, 48, 88, 110, 113–14, investment gaps 143, 144–5, 147, 115, 118 148–51, 152–3, 157–8 smooth convergence 52–3 strengthening economic convergence social safety nets 133 64, 67–8 SOEs (State-Owned Enterprises) 60–61 see also RDI Solidarity movement (Poland) 64–5 race to the bottom 69 Solow, R. M. 136 RDI (research, development and Spain 173–5 innovation) 110, 114, 115 state-of-the-art machinery and real convergence 3, 16–17 equipment 135, 141–2, 143 Bulgaria’s monetary policy 57, strengthening economic convergence 59–61, 62 64, 70 impact of monetary policy on EU budget 66, 67 economic convergence 51–3, fiscal transfers 69–70 55 global financial crisis 65–6, 69–70 monetary policy and catching-up increased investment spending 67–70 28–33, 42, 47, 49 research and development 64, 67–8 ‘red flags’ 84–5 slower pace of convergence 64–7 Reform Support Programme 5 taxation 68–9 reform–investment link 167–70 structural gap changes 145–7

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suboptimal investment situations 111, transport and energy infrastructure 114, 115, 119 (structural indicator) 143–5, 147, supply-side structural reforms 160, 148–53, 158–9 162–4, 174–5 trust 72, 73, 74, 78 sustainability orientation 93–4, 95–7, Two Pack 172 103 sustainable convergence 28, 36, 37–49, unemployment 5, 44, 66, 75, 133 51–2, 54 financial instruments 106, 120 sustainable development 4, 67, 70, 93, financing cohesion policy (EU 101 budget) 81–2 Sustainable Development Goals 101 investment environment 163, 164, 168, 174 taxation 78, 164, 168 United Kingdom 84, 124 added value (EU budget) 95–6, 97, Brexit 2, 66, 67, 72, 81, 96, 101, 101, 102–3 102–3, 107, 110 financing cohesion policy (EU United States 68, 69, 132, 165 budget) 82, 83, 84, 85, 90 deindustrialization 124, 125, 126 strengthening economic convergence 68–9 VAT (value added tax) 82, 83, 95, 101 VAT (value added tax) 82, 83, 95, vulnerabilities 31–2, 33, 36–7, 49 101 technology transfer 11–12 Washington Consensus 165 TFP (total factor productivity) Watt, A. 175 fostering convergence (EU’s role) 10, WEF (World Economic Forum) 45, 11, 12–15, 16 47 monetary policy and catching-up 30, working-age population 37, 44, 131 37, 45 World Bank 4, 45, 118, 165 Tóth, I. J. 85 trade openness 30, 47 ZLB (zero lower bound) interest rates Transition Report (EBRD, 2015−2016) 76 39–40 Żuk, P. 44, 47

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