The Czech Republic is commemorating 20 years since joining the European Union. According to all relevant studies, it brought prosperity. The economic prediction that we will catch up with Europe within 20 years has come true. Our standard of living has risen to 90 percent of the European average and we have overtaken Portugal, Spain or Italy. What influenced it all? Lubor Lacina from the Faculty of Business and Economics at the Mendel University in Brno explains this in the Money Talk program.
MONEY TALKS
Prague
20:52 May 2, 2024
Share on Facebook
Share on LinkedIn
Print
Copy the url address
Abbreviated address
Copy to clipboard
Close
European flags in front of the European Commission headquarters in Brussels, Belgium on September 20, 2023 | Photo: Yves Herman | Source: Reuters
“The data show that the positive impact on the economy did not occur until after accession, but already at the time when we were trying to fulfill the criteria for joining the European Union. The EU-15 countries asymmetrically removed tariffs and other market barriers towards us,” warns economist Lacina.
What does EU membership bring us and what does it take away from us? Economist Lubor Lacina explains in the program Speech of money
According to him, these steps triggered a massive influx of foreign investments. “When you are an EU country, investors are guaranteed all the legal regulations and certainties that are important for capital holders – investment protection,” he points out.
But while the Czech GDP reached 90 percent, domestic wages rose to only 60 percent of the European average. In other words, the Czech Republic has an almost average economy, but deeply below average wages.
“Low wages cannot be blamed on membership in the European Union. The beginning is in the choice of the method of transformation – coupon privatization, which, although very quickly changed state ownership to private ownership, but gave the property to owners who did not have sufficient capital. It then completely disappeared after the banking crisis in 1997,” the economist recalls.
GDP, innovation, subsidies
Looking at the GDP of the European Union, growth in the last two decades is depicted at an average annual rate of 1.6 percent. While the US grew by an average of two percent per year. The great enlargement of the Union in 2004 started this growth.
“Companies from the old member countries – Germany, the Netherlands, France – got access to relatively educated cheap labor in Central and Eastern Europe. When they combined this with access to Asian markets, it strongly strengthened the competitiveness of Western European companies,” explains Lacina.
According to the economist, the reason why the European Union partially lags behind the United States is the inability to finance new ideas.
“It is becoming more and more evident that any subsidy system cannot really support innovations that could be breakthroughs and drive growth. Only a robust capital market can do this,” concludes Lacina.
How are Czech companies doing in European competition? And what are the disadvantages of EU membership? Listen to the entire program in the audio recording at the beginning of the article. Hosted by Václav Pešička.
Václav Pešička, fos
Share on Facebook
Share on LinkedIn
Print
Copy the url address
Abbreviated address
Copy to clipboard
Close
Tags: Economic growth ensured strong market subsidy system believes economist Lacina iRADIO
-
