The New Political Economy of Emerging Europe.

Bryson, Phillip J.

The New Political Economy of Emerging Europe

Laszlo Csaba

Akademiai Kiado: Budapest, Second edition, 400pp.

More sweeping in its scope than its title or size would reveal, this book reviews and analyses an epochal historic development from before the end of the Second World War to the present. Laszlo Csaba covers an immense literature not only on the European Union (EU), but on the transitional economies and on developmental questions as well. Reviewing the whole of the dramatic EU development helps one overlook recent negative events such as the failure of the EU constitution and the stagnation of some of the major EU economies. In long-term perspective, exchanging centuries of European Wars for spectacularly successful economic integration is a major achievement for human history.

Csaba is an established Hungarian economist, who teaches at the Central European University and two other universities in Budapest. The title 'New Political Economy' reflects the author's interest in merging the analytical insights of mainstream economics with the 'major role played by institutions and policies', within a theoretical, economic systems framework. He discusses at some length the important contributions of diverse, widely known contemporary economists to the literature that would illuminate our understanding of European and systems economics since the founding of the European Coal and Steel Community. He also refers to some of the major debates on market socialism, as well as the way such systems (eg, Yugoslavia's labour-management model or Hungary's New Economic Mechanism) functioned in reality.

One chapter provides a review of empirical evidence on trade, foreign direct investment and the economic performance of the transitional countries that have recently acceded to the EU, including a lot of data on those topics for Eastern Europe and the Commonwealth of Independent States. Csaba investigates the many factors that have made the transition efforts of the former central planning economies more or less successful.

He adds a long chapter on China, which he views as a form of market socialism, and takes the opportunity to raise issues of economic development in general. Despite its scope in analysing institutions, Csaba makes continual references to serious empirical studies, too.

Csaba's evaluation of the EU's pursuit of social cohesion through programmes of regional development is a topic close to my own research. Transfer programmes to boost the infrastructure of the community's lagging regions have helped their development. But, as Csaba confirms, infrastructure amelioration has failed to jump-start productivity growth in those regions. Transfers on the scale of the past to a limited number of regions will not be realistic for the future of the community because of the addition of numerous transitional and developmental economies composed almost exclusively of lagging regions by prior EU standards. Future efforts to promote EU economic growth and development will apparently consist of the much less costly approach of simply encouraging community members to promote the implementation of information and communications technologies as the means to achieve the goal.

Csaba also reviews problems of the core, pre-expansion EU countries. Some of those economies have undertaken reforms that will help secure the viability of the welfare state, while others, such as Germany, France and Italy, have not progressed beyond incremental and tentative reforms that nobody expects to suffice in the long run.

Introduction of the euro currency in much of the community will have implications for the community and the world. The author also considers the Stability and Growth Pact in this connection. He considers monetary policy challenges, the hazards for the new countries of quickly adopting the euro and the difficulties of some of the leading members of the EU have experienced in keeping the fundamental rules they supported in the formation of the European Monetary Unit.

In a chapter on economic regulation within the community, privatisation and deregulation processes, the author notes that under globalisation, trade and foreign direct investment issues between Europe and the outside world will be linked through the EU's policies and approach to industrial regulation. The interrelationships between welfare and financial sector reforms are also considered--first, catch-up and modernisation efforts of the transition countries and second, the different menu of problems facing the old welfare states with their labour market rigidities and bloated budgets ('eurosclerosis').

To reach the book's full potential impact, its English should have been more than just acceptable, free of typos and an occasional incoherent phrase. Even so, the book is worth reading for the wealth of helpful information it contains and the insights of an author deeply involved in absorbing and enriching central planning, transition, European economic history, development, political and economic systems literatures. It could be used as a textbook but is also targeted at Europeanists and professionals in multiple academic fields.

doi:10.1057/ces.2008.12

Phillip J. Bryson

Brigham Young University, Provo, UT, USA