Progress towards meeting economic criteria for accession
164 pages
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Progress towards meeting economic criteria for accession


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En savoir plus
164 pages


The assessment from the 2002 regular report
Construction of Europe
Economic policy - Economic and Monetary Union
Target audience: All


Publié par
Nombre de lectures 73
Langue English
Poids de l'ouvrage 3 Mo


ISSN 1608-9022
Number 10 October 2002
Progress towards meeting
economic criteria for accession:
the assessment from the 2002 Regular Report
Directorate General for
Economic and Financial Affairs Enlargement Papers are prepared by the services of the European Commission or by experts working
in association with them.
The Enlargement Papers are intended to provide information on the economies of the candidate
countries and on the economic implications of EU enlargement.
Comments and enquiries should be addressed to:
European Commission
Directorate-General for Economic and Financial Affairs
Β - 1049 Brussels, Belgium ENLARGEMENT PAPERS
ISSN 1608-9022
Number 10 October 2002
Progress towards meeting
economic criteria for accession:
the assessment from the 2002 Regular Report
Directorate General for
Economic and Financial Affairs
ECFIN/543/02 - EN This paper only exists in English. KC-AA-02-OTO-EN-C
c European Communities, 2002. Table of contents
Foreword 4
Introduction 5
Overview 8
Bulgaria 13
Cyprus 24
Czech Republic 37
Estonia 49
Hungary 58
Latvia 70
Lithuania 8
Malta 91
Poland 10
Romania 112
Slovakia 124
Slovenia 135
Turkey 147 Foreword
In this Enlargement Paper the Directorate General for Economic and Financial Affairs
brings together into a single document the economic chapter of the Regular Report 2002
on progress made towards meeting the accession criteria by each candidate country, as
well as a horizontal overview. The European Commission adopted these Reports on
9 October 2002. The introduction explains the underlying methodology that the
commission has been following since the publication of the 1997 Opinion, in order to
carry out these assessments.
The purpose of this Enlargement Paper is to facilitate the work of those scholars,
researchers and analysts of the enlargement process, which are mainly interested in the
economic aspects. As such, it represents only a part of the overall progress made by the
candidate countries towards meeting the accession criteria.
A proper full assessment of progress made by candidate countries towards accession will
require the reader to have a comprehensive reading of progress made under all the so-
called Copenhagen accession criteria. The last assessment can be found in the Regular
Reports 2002. Introduction
In 1993, the Copenhagen European Council identified the economic and political
requirements candidate countries will need to fulfil to join the EU. It also concluded that
accession could take place as soon as they were capable of fulfilling them. The criteria
the Political criteria - stability of institutions guaranteeing democracy, the rule of •
law, human rights, and respect for and protection of minorities;
the Economic criteria - the existence of a functioning market economy as well as •
the capacity to cope with competitive pressure and market forces within the Union;
• the Institutional criteria - the ability to take on the obligations of membership
including adherence to the aims of political, economic and monetary union, which
includes the whole range of policies and measures that constitute the acquis of the
Union. Candidate countries must adopt, implement and enforce the acquis. This
requires the administrative capacity to transpose European Community legislation
into national legislation, to implement it and to effectively enforce it through
appropriatee and judicial structures.
The Commission first assessed progress made by the candidate countries with respect to
these criteria in the 1997 Opinions. Thereafter, the Commission, at the request of the
Council, had submitted annual regular reports to the Council assessing the further
progress achieved by each candidate country on their fulfilment. These reports have
served as one of the elements for the Council to take decisions on the conduct of
negotiations and on the definition of the pre-accession strategy.
Regarding the economic criteria, the Commission has followed the same methodology in
the Opinions and in the Regular Reports. It has examined progress achieved to arrive at
an evaluation of the total achievement, taking into account every year an extra year of
The Commission clearly sets out its method to assess the Copenhagen economic criteria
in the Opinions. The criterion for the existence of a market economy can be met now
whereas the secondn - the capacity to withstand competitive pressures and
market forces within the Union - is to be met in the perspective of accession, when
candidate countries become Member State.
a) The existence of a functioning market economy
The existence of a functioning market economy requires the following conditions to be
equilibrium between demand and supply is established by the free interplay of market •
forces; prices, as well as trade, are liberalised;
significant barriers to market entry (establishment of new firms) and exit
(bankruptcies) are absent;
the legal system, including the regulation of property rights, is in place; laws and
contracts can be enforced;
macroeconomic stability has been achieved including adequate price stability and
sustainable public finances and external accounts; broad consensus about the essentials of economic policy;
the financial sector is sufficiently well developed to channel savings towards •
productive investment.
b) The capacity to withstand competitive pressure and market forces within the
The capacity to withstand competitive pressure and market forces within the Union is
assessed on the basis of the following factors:
• the existence of a functioning market economy, with a sufficient degree of
macroeconomic stability for economic agents to make decisions in a climate of
stability and predictability;
• a sufficient amount, at an appropriate cost, of human and physical capital, including
infrastructure (energy supply, telecommunication, transport, etc.), education and
research, and future developments in this field;
• the extent to which government policy and legislation influence competitiveness
through trade policy, competition policy, state aids, support for SMEs, etc.;
• the degree and the pace of trade integration a country achieves with the Union before
enlargement. This applies both to the volume and the nature of goods already traded
with member states;
the proportion of small firms, partly because small firms tend to benefit more from •
improved market access, and partlye a dominance of large firms could
indicate a greater reluctance to adjust.
The Opinions and each year after, the regular reports, assess each candidate country in
the light of progress made in respect of these conditions. Assessing a country's position
regarding the second criterion is more difficult than the first because: (i) the criterion is
more complex; (ii) the judgement has to be made in the perspective of accession; (iii)
meeting this criterion depends in part on meeting the first, and (iv) even when the right
policy measures are being taken, these take time to work their way through the economy
and have their full impact on its ability to cope with competitive pressures. Hence the
issue of track record is very important.
Finally, the above conditions should not be regarded as simple checklist. For it is the
interplay and interaction of all conditions, and their mutually reinforcing effects on the
economy, that are pertinent. There is also an important time dimension involved, meeting
the economic criteria requires, certainly in the case of transition economies, deep and
lasting structural reforms that take time to be accomplished. The issue of track record,
which was one of the factors considered in the Agenda 2000, becomes then very relevant.
In this context, track-record means the irreversible, sustained and verifiable
implementation of reforms and policies for a long enough period to allow for a
permanent change in the expectations and behaviour of economic agents and for judging
that achievements will be lasting. Main Indicators of Economic Structure in 2001 (as of 3 September 2002)
10.224 1.364 3.481 394,5 c 38.641 Population (average) Thousand 7.915 762,3 Ρ 10.190 Ρ 2.355 22.408 5.380 1.992 68.618
GDP per head a PPS 6.500 18.500 13.300 9.800 11.900 7.700 8.700 9.200 5.900 11.100 16.000 5.200
Per cent of
28P 80P 57P 42P 51P 33P 38P 40P 25P 48P 22P 69P
EU average
Share of agriculture b in: 3,9 4,2 5,8 4,7 7,0 2,4 3,4 14,6 4,6 12,1 3,1 13,8d
per cent - gross value added
- employment per cent 4,9 4,6 6,1 15,1 16,5 2,2 19,2 44,4 9,9 35,4 7,1 6,3 26,7 d
Gross fixed capital per cent
23,4 19,4 17,8 28,3 26,1 27,3 23,2 21,5 19,0 31,9 24,9 17,8
Gross foreign debt of the per cent 77.4 74.9 26.5 26.8 44.6 45.7 25.5 179.2 23.3 21.3 33.4 27.0 47.7
whole economy/GDP d
60,5 44,9 50,4 Exports of goods & Per cent 55,7 46,9 71,3 90,6 87,8 29,8 33,5 75,9 60,1 33,2
Stock of foreign direct Million Euro 2.151 c 23.352 d 2.843 d 2.284p d 2.508 d 36.783p d 5.496 e 2.80Γ 3.041pd
investment Euro per head
a 272 2.284 2.084 970p 720 952p 245 521 1.527p
Long term per cent of 12.6 0.9 4.2 5.8 2.6 7.7 9.3 2.8 9.2 3.2 11.3 3.6 1.8
unemployment rate labour force
P: provisional data
a Figures have been calculated using the population figures from National Accounts, which may differ from those used in demographic statistics.
b Agriculture, hunting, forestry and fishing.
c Total Population (Maltese & Foreigners).
d Data refer to 2000.
ea refer to 1999. Overview
Overall development
This year's Regular Reports' assessments of candidate countries' progress towards
meeting the Copenhagen economic criteria take a somewhat broader look than in
previous years. They do not only look at progress achieved since the last Regular
Reports, but also take stock of the overall achievements in meeting the Copenhagen
economic criteria over the period since 1997, when the Commission drafted its Opinion
for most candidate countries.
Over the 5-year period 1997-2001 the European Union, the main trading partner and
foreign investor for all candidate countries, grew by 2.6%. Over the same period, most
candidate countries registered average rates of economic growth well above the EU
average. Notable cases are Poland (4.2%), Estonia (5.2%), Latvia (6.1%). On the other
hand, Romania (-1%), the Czech Republic (1.1%), Turkey (1.2%) and Bulgaria (2%)
constitute exceptions to this general trend. In these latter countries macroeconomic crises
or severe recessions, followed by stabilisation efforts depressed the average economic
performance; yet, in all these countries, growth has resumed, and the causes behind the
crisis are or have been addressed.
The more recent global slowdown, that started in late 2000, also affected the EU and,
with some delay, candidate countries. In most of them, growth slowed down in the
second half of 2001 to an annual average growth of 3.1% for the ten transition candidate
countries and -0.1% for all 13 candidates. The highest growth was recorded in the Baltic
countries, based on strong domestic demand and favourable economic developments in
Russia. In Poland, on the other hand, the economy expanded by only 1.1%, mainly due to
sharply lower domestic investment. In Turkey, the GDP contracted by 7.4% and
developments at the end of 2001 continued to be unfavourable. Yet, the situation seems
to be gradually stabilising after the two crises from end 2000 and early 2001. The
exchange rate has recovered somewhat and real interest rates are slowly coming down to
more sustainable and growth-supporting levels. Malta also recorded negative growth,
mainly because of its exposure to the world-wide slowdown in the information
technology sector. In four countries (Latvia, Lithuania, Romania and the Slovak
Republic) growth even accelerated in 2001 compared to 2000.
GDP per capita measured in Purchasing Power Standards (PPS) reached, on average for
the ten transition economies 39.3% of the EU average in 2001, up from 38.5% in 2000.
In Turkey it fell, due to the adverse development in this country, by 2.6 percentage points
to 22.4%. Apart from Poland and the Slovak Republic, all other candidates recorded in
2001 a further catching up of income levels to the EU average. Over the 5-year period,
most candidate countries also witnessed a catching up. This process was particularly
strong in Cyprus, which already enjoys the highest income level of all candidate
countries, Slovenia, Latvia, Hungary and Estonia. Thee gap to the EU has widened
in the Czech Republic, Romania and Turkey, influenced by the respective economic
downturns. In most countries income inequalities between regions has tended to increase.
The aggregate economic development has been fairly stable over the first half of 2002.
Whereas the first quarter performances were mostly overshadowed by the weakening
global demand, the second quarter showed some improvement in most countries.
In 2001, triggered by weaker global economic conditions, exports have been expanding
more slowly in most countries than in the particularly strong year of 2000. Yet, for the
average of all candidate countries, goods exports still grew by close to 10%, much more

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