<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The post-2008 slowdown in economic convergence by countries of east central Europe towards the level of western Europe is interpreted with the help of a concept of dependent capitalism. Convergence appeared to be rapid up to that year, but then stalled, albeit with differing results depending on the measure used. Dependent capitalism meant that the driver for economic growth comes from inward investment by multinational companies (MNCs). Domestically owned businesses failed when faced with international competition, and their agenda hampers policies supporting an active role from the state. Inward investment is attracted by low wages and has contributed to substantial growth, but the slowdown in investment was accompanied by much slower economic growth and dangers that past investment could turn into a burden on the external balance. The strategies pursued by incoming MNCs have brought areas of upgrading, but frequently leave technological levels somewhat behind those of western Europe. Even where they use the same technologies as in their home countries, wages still remain significantly lower. Achieving full convergence would require a different growth model following a substantial change in economic policies: this does not appear likely in the near future.</p></abstract>

The post-2008 slowdown in economic convergence by countries of east central Europe towards the level of western Europe is interpreted with the help of a concept of dependent capitalism. Convergence appeared to be rapid up to that year, but then stalled, albeit with differing results depending on the measure used. Dependent capitalism meant that the driver for economic growth comes from inward investment by multinational companies (MNCs). Domestically owned businesses failed when faced with international competition, and their agenda hampers policies supporting an active role from the state. Inward investment is attracted by low wages and has contributed to substantial growth, but the slowdown in investment was accompanied by much slower economic growth and dangers that past investment could turn into a burden on the external balance. The strategies pursued by incoming MNCs have brought areas of upgrading, but frequently leave technological levels somewhat behind those of western Europe. Even where they use the same technologies as in their home countries, wages still remain significantly lower. Achieving full convergence would require a different growth model following a substantial change in economic policies: this does not appear likely in the near future.

Dependent capitalism and the middle-income trap in Europe na East Central Europe

International Journal of Management and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Dependent capitalism and the middle-income trap in Europe na East Central Europe"}

The post-2008 slowdown in economic convergence by countries of east central Europe towards the level of western Europe is interpreted with the help of a...

Dependent capitalism and the middle-income trap in Europe na East Central Europe

Article Category: Research Article

Published Online: Dec 31, 2018

Page range: 291 - 303

Received: May 17, 2018

Accepted: Dec 28, 2018

DOI: https://doi.org/10.2478/ijme-2018-0028

Keywords
Eastern Europe, Capitalism, Economic Performance, Dependency

© 2018 Martin Myant, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Dependent capitalism and the middle-income trap in Europe na East Central Europe

Article Category: Research Article

Published Online: Dec 31, 2018

Page range: 291 - 303

Received: May 17, 2018

Accepted: Dec 28, 2018

DOI: https://doi.org/10.2478/ijme-2018-0028

KeywordsEastern Europe, Capitalism, Economic Performance, Dependency

© 2018 Martin Myant, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
Eastern Europe, Capitalism, Economic Performance, Dependency