Varieties of dependent growth models: External finance in Central and Eastern European economies

Abstract

This paper explores the changing landscape of external finance in Central and Eastern Europe (CEE) following the global financial crisis of 2008. Through comparative statistical analysis, it traces shifts in the primary sources of external finance, including foreign direct investment (FDI), EU subsidies, remittances, and external debt. The findings reveal a significant decline in the importance of FDI and external debt, offset by an increasing dependence on EU subsidies and remittances. The paper categorises countries into three groups according to their dominant source of external finance, with only one cluster remaining primarily FDI-led. By unpacking these varied forms of financial dependence, the paper provides a more nuanced understanding of post-crisis growth models in the CEE region. It concludes that, while the composition of external finance has shifted, overall dependency has persisted.