w 109 long-run economic aspects of the european union's eastern ...

LONG-RUN ECONOMIC ASPECTS OF THE EUROPEAN UNION’S EASTERN ENLARGEMENT2.2 ASSESSING PRE-ACCESSIONIn tracing gaps in the current adoption of the IM acquis it is neither possible norfruitful for the purpose of this study to descend to the level of the greatest detail,even though such detail matters in market transactions. Very detailed assessmentsare suitable for a full understanding of the accession negotiations or for specialisedquestions in a given policy or business area. Our focus is on the long-run (prospectof) adoption, in the context of the entire set of the Copenhagen criteria, as well ason the interaction with the process of transition to a functioning market economy.Specific adoption gaps in the more difficult areas can subsequently be identifiedand discussed, since it will take time to overcome them.Tables 2.2a and 2.2b provide a bird’s eye view of the most recent assessments ofpre-accession. Table 2.2a evaluates the five first wave CEEC-accession countrieswhereas Table 2.2b evaluates the second wave plus Turkey. The inclusion ofTurkey is explained below.28The overall picture is first of all determined by the accession criteria (other thanthe political ones). The realisation of a market economy is confirmed for the firstgroup, whilst the second ‘wave’ exhibits two confirmations, two countries whichare ‘close’ and two denials for Bulgaria and Romania. As Turkey never was aplanned economy, it has no transition legacy. The ‘ability to withstand competition’(in Copenhagen defined at the country, not the sectoral or firm level) is hardto interpret for economists; in a well-functioning market economy it is hard toenvisage the lack of such an ability. In all probability it refers to the adjustmentcosts of reallocating human, financial, physical, nature-based and knowledgeresources, which are a function of experience, sector specificity, ‘new’ skills, butalso habits, mindsets, general employability and social security systems, etc. TheEast German example has demonstrated rather dramatically that even the relianceon well-tested (namely, West German) market rules and institutions, a robustsocial security system and enormous investments – public and private – cannot‘magically’ solve this transformation problem without high adjustment costs,material as well as immaterial. In this light, the second criterion (‘competitiveness’for short, in table 2.2) being fulfilled only in the medium-term is neither surprisingnor alarming. The difference with Turkey is interesting because the customs unionwith the EU and a wave of privatisations have stripped away a good deal of thepossible cushions against fully-fledged competitive exposure . 2 Of greater concernis the assessment for Romania. If Romania cannot face fully-fledged competitiveexposure before long, it is liable to get twisted into vicious circles of defensiveinterventions which will undermine the acquis adoption and discourage entrepreneurialresources as well as foreign investors. The roots of the disappointing performanceby this country lie in its fragile coalition; reformers do not have theupper hand and the full implications of the acquis are de facto not accepted 3 .Other countries have had periods of hesitation (Slovakia, Bulgaria; in a weakersense, Lithuania) but Romania is now the only accession country in Central