The Impact of the Global Economic Crisis in the Old and New Cohesion Member States of the European Union

Abstract

Within the European Union cohesion member states were hit hardest by the global economic crisis. In this region, devel-opment relied more heavily on the influx of foreign capital compared to other emerging regions, which, in turn, made these coun-tries more vulnerable to the effects of the crisis. The extent of the downturn depended on the imbalances accumulated before the crisis. As a result, the growth outlooks of Poland, Slovakia, and the Czech Republic have deteriorated least, whereas Hungary fell behind the Visegrád countries. Ireland and the new cohesion member states facing a difficult situation reacted more flexibly to the crisis than the Mediterranean countries. The cohesion member states suffered more significant losses in areas key to growth poten-tial (investments, education, innovation), and were forced to employ harsher austerity measures in these areas compared to the Northern/Western central states, which supports econometric analyses forecasting a slow-down of convergence. This also makes it necessary to redefine the concept of integration.