New Europe’s Old Regions



State intervention has had catastrophic effects

Economic Theory

The fifteenth edition of the Heritage Foundation's popular survey of economic liberty

Liberalisation and political reform are needed in the poorest parts of the EU
The recent accession of the former communist countries of Central and Eastern Europe to the European Union significantly changed many of its social and economic characteristics. For example, a situation was created where income differences between regions in the EU are on a par with those between Britain and some African countries. Regional differences in productivity and employment levels within the EU are even more stark than income differences. This monograph examines the policies that should be used to address the poor economic performance of New Europe’s old industrial and agricultural regions.

The author finds traditional regional policy wanting, but feels there might be a role for the ‘new regionalism’ that is focused on trying to boost the productivity of peripheral regions. However, using Poland as a case study, he is able to show that, if new-style regional policies are introduced without policies aimed at liberalisation, lower taxes and reduced employment protection, then nothing of substance will be achieved. This analysis has profound implications for the EU more widely. If there is to be economic liberalisation within the EU then there probably has to be political reform too.

This study is essential reading for anybody interested in the future of the EU and the role of regional policy in economic development.

2009, Hobart Papers 165, ISBN 978 0 255 36617 5, 199pp, PB

Further reading:

The European Institutions as an Interest Group by Roland Vaubel

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