How Can the New Members Catch Up?

Of the ten new EU member states, eight have undergone a transformation whose speed and scope has been unprecedented. Wherever one looks in the postcommunist accession countries ­­- at money, markets, ownership structures, banking sectors, foreign trade, health care, environmental protection, and education - one sees institutions that have been reconstructed from the ground up.

In many of the transition countries, inflation was brought down from majestic heights - 251% in Poland in 1989 - and all now have fully convertible currencies. Private enterprise dominates production and employment, whereas it accounted for only 23.1% of GDP in Poland in 1989 and just 4% in the Czech Republic and Slovakia.

Similarly, after the collapse of the Council for Mutual Economic Assistance (COMECON) in 1991, the transition countries quickly redirected their foreign trade to the West. Educational opportunities have multiplied, air and water pollution have plummeted, and life expectancy has increased almost to West European levels across the region.

Since the early 1990's, the prospect of eventual admission to the EU has helped spur these institutional changes. But now the task for the new member states - which account for 20% of the enlarged EU's population but only 5% of its GDP - is no less difficult: to achieve the rapid catch-up growth rates needed to close the economic gap with the EU's leaders.