















































1      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

 

 

 

 

 

The Economic Successes and Sources of Discontent in East Central 

Europe1  
 

Rachel A. Epstein2 

 University of Denver 

  

 

 

 

Abstract 

By some measures, the European Union’s Eastern enlargement, and the attendant securitization of 

East Central Europe through membership in the North Atlantic Treaty Organization, have brought 

significant economic and welfare benefits to the former Soviet satellites or republics that have 

joined these organizations. All of their economies are considerably larger than in 1989. Foreign 

investment has helped fuel significant growth in the region, and financial linkages between East 

and West had a stabilizing influence during and after the US financial crisis of 2008-09. But 

economic success in absolute terms has not prevented a sense of disappointment from settling over 

the region, nor has it forestalled an illiberal backlash in a number of countries, which has had 

economic, political, and in some cases ethno-populist dimensions. This article examines some of 

the main economic trajectories around growth, consumption, investment, and finance. It explains 

why, despite numerous positive measures, both economic and political liberalism are under 

intensifying scrutiny. Growing inequality within countries, as well as continuing inequality – 

including power disparities between East and West Europe – have fueled discontent with the terms 

on which many East Central European states have integrated into the EU.   

 

  

 
1 The author would like to thank Anushka Bose and Chuck Aoki for their research assistance on this project. 
2 Rachel A. Epstein is a Professor at the Josef Korbel School of International Studies at the University of Denver. 



2      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Introduction 

East Central Europe (ECE) has historically been the seat of major empires. It has also been the 

source of cultural, spiritual, and political innovation. But ECE has also been the site of foreign 

domination and occupation, shifting borders, forced population movements, diaspora settlement 

and oppression, in addition to the most brutal and comprehensive forms of ethnic cleansing. In the 

20th century alone, events in Munich, Yalta, and Katyń were illustrative of the ways in which the 

then still relatively new nation-states of the region fell victim to foreign political manipulation, 

ally abandonment, and mass atrocities. Of course, every country in the world faces limits on its 

sovereignty. But emerging from World War II, such limits in ECE were extreme; in every country 

except Yugoslavia, Soviet takeovers and Western acquiescence made a mockery of alleged 

statehood conferred in the aftermath of World War I (Mazower 1998; Rothschild and Wingfield 

2000).  

The open-door policies of the North Atlantic Treaty Organization (NATO) and the European 

Union (EU) in the 1990s represented a radical break with the bleak history depicted above. NATO 

enlargement, beginning in 1999, and EU enlargement, beginning in 2004, gave the relatively small 

East Central European states an unprecedented opportunity to shape their own political trajectories 

and international allegiances, and a significant voice within two of the world’s most powerful 

international institutions. Membership in NATO and the EU enhanced these countries’ political 

power through, depending on the organization, voting rights, resources, institutional 

representation, and security guarantees. Debates about the true motivations and interests at play 

driving enlargement notwithstanding (Schimmelfennig 2001; Reiter 2001; Moravcsik and 

Vachudova 2003; Epstein 2008), there is little doubt that the post-1989, post-enlargement phase 

of Europe’s evolution is more democratic, peaceful, representative, and economically open for 

ECE than any previous transnational political or institutional arrangement.  

The focus of this article then is to explain why, despite demonstrably enhanced political efficacy 

as well as wealth in ECE, there is nevertheless widespread skepticism of the same political and 

economic liberalism that underpinned ECE’s recent dramatic reversal of fortunes. More 

specifically, the analysis in this article highlights the degree to which income levels between East 

and West Europe have converged, foreign investment has fueled growth, and financial integration 

has curbed volatility. In each of these areas, despite a seeming increase in equality, and closer 

connections between East and West Europe, there are still lingering disparities, both within and 

between countries. These disparities provide justification for economically nationalist and 

Euroskeptic narratives. While economic inequality and dependence are not the only issues that 

have contributed to the rise of some increasingly authoritarian forms of governance in ECE, 

economic dissatisfaction has been an aggravating factor.   

Very often, scholarly work examining developments in ECE focuses on socio-political factors 

affecting the region (e.g. Trencsényi 2014; Vachudova forthcoming in 2020). Factors include 

ethno-nationalist mobilization, rhetoric and policies against migrants and asylum-seekers, curbs 

on checks and balances among democratic institutions, and ongoing corruption under the guise of 

purported corruption elimination efforts. The argument here, by contrast, is that underlying 

economic conditions in ECE provide a foundation for illiberal and populist politicians, particularly 

as those conditions reinforce power disparities between East and West Europe, as well as power 

and wealth differentials within countries. If at least some populations “evaluate the economy 

through the prism of identity, relying less on traditional measures like economic growth, social 

spending, or unemployment and more on perceptions of fairness and concerns about keeping 



3      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

outsiders away” (Vachudova 2019, 698), politicians can plausibly use some of the underlying 

economic conditions outlined in this article as evidence of East Central European victimhood.  

To be clear, majorities in the EU’s New Member States (NMS) strongly favor EU membership, 

even as pluralities, if not majorities, have also elevated political parties that are highly critical of 

EU policies. At the same time, the analysis here argues that ECE’s continuing economic 

subordination, stemming from a long legacy of relative under-development compared to the West, 

has contributed to this paradox. 

 

Income Convergence 

Measures of income convergence that correct for purchasing power parity show that both the 

transition that began in 1989, and the EU’s enlargement in 2004, correlate with strong output 

convergence between Eastern and Western Europe. However, measures of absolute output in ECE 

lagged significantly behind the ‘old EU-15’. These different measures have affected lived 

experiences of East Central European populations; accordingly, they impact who can take full 

advantage of the EU’s single market (or opportunities in the global economy). A country’s share 

of absolute output is a more accurate measure of power within the EU or larger economy than 

GDP adjusted for purchasing power. It is by this former measure that ECE countries lag 

significantly behind many of their Western counterparts. 

According to measures that adjust for purchasing power parity across countries, EU enlargement 

has generated strong income convergence between ECE and the EU 28, as demonstrated in Table 

1. Several developments are of note here. First, since 2004, every country except Slovenia has 

gained ground vis-à-vis the EU as a whole. The US financial crisis and the Eurozone crisis that 

followed were particularly devastating for Slovenia, which explains its relative stasis compared to 

many other NMS. Second, Poland, Romania, Slovakia, and the Baltic States stand out for having 

moved particularly rapidly in the direction of convergence. Third, ECE countries are no longer the 

poorest as a group in the EU. The US, European and global financial crises moved Greece and 

Portugal closer to the bottom of the EU 28. In 2019, the Czech Republic surpassed Spain according 

to the GDP per capita adjusted for purchasing power. One should note that these are the 

convergence statistics that the European Commission and its attendant statistics bureaus prefer to 

publicize. They not only show economic progress, but do so in a way that takes into the account 

the cost of living across countries. In that sense, correcting for purchasing power parity is a good 

measure of relative welfare. Even if the Polish złoty or the Hungarian forint are volatile or weak 

compared to other major currencies, including the euro, the table below nevertheless measures 

how far the currency goes within any given polity or economy, irrespective of that volatility or 

weakness. From a welfare perspective, the EU can convincingly argue that the EU is in fact a 

“convergence machine” (World Bank 2012). 

 

 

 

 

 

 

 

 



4      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Table 1: East Central European GDP per Capita in Purchasing Power Standards (EU 28 = 100) 

  2004 2007 2011 2013 2017 

Bulgaria 35 41 45 46 49 

Croatia 57 61 60 59 62 

Czech 

Republic 
79 84 83 83 

89 

Estonia 55 68 69 75 79 

Hungary 62 61 65 67 68 

Latvia 47 60 56 62 67 

Lithuania 50 61 65 73 78 

Poland 49 53 64 67 70 

Romania 34 42 51 54 63 

Slovak 

Republic 
56 67 73 76 

76 

Slovenia 86 87 83 81 85 

Data Source: Eurostat, available at: https://ec.europa.eu/eurostat/statistics-explained/index.php/ 

GDP_per_capita,_consumption_per_capita_and_price_level_indices. Note that Bulgaria and Romania joined the EU 

in 2007 and Croatia joined in 2013. All of the other countries depicted here joined in the ‘big bang’ enlargement of 

2004. 

Income convergence can also be measured in absolute terms, as demonstrated in Table 2. Aside 

from the fact that Table 2 does not adjust for purchasing power parity, it also compares the NMS 

to the EU’s older 15 member states, rather than to the EU 28. Both of these differences in 

measurement provide a more sobering assessment of ECE’s convergence with the West. While 

Table 1 is a good measure of relative welfare in various EU countries, Table 2 is a better measure 

of absolute economic output and therefore of relative power in the EU. Absolute output reveals 

who can readily travel or seek education abroad; it also identifies which countries are more likely 

to suffer from brain drain, and, on the other side, which countries are likely to be able to afford 

other countries’ assets and to hire their workers. Whereas Poland went from 49 percent of the EU 

28 to 70 percent by 2017 when corrected for purchasing power, in absolute terms the country 

moved from just over 18 percent of the old EU 15 average to approximately 30 percent. These 

statistics reveal that Easterners and Westerners can avail themselves of the EU’s common market 

to significantly varying degrees – whether one is considering business, travel, or educational 

opportunities. Not surprisingly, brain drain has often been a phenomenon of young, skilled people 

moving from East to West, while foreign investment has flowed from West to East. While both 

trends potentially lead to economic and power equalization over time (EBRD 2009), there is no 

guarantee that they will – particularly if relative deprivation in the East hampers innovation and 

human capital formation that would otherwise help build the local economy (Bohle and Greskovits 

2019). 

 

 

 

https://ec.europa.eu/eurostat/statistics-explained/index.php/GDP_per_capita,_consumption_per_capita_and_price_level_indices
https://ec.europa.eu/eurostat/statistics-explained/index.php/GDP_per_capita,_consumption_per_capita_and_price_level_indices


5      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Table 2: East Central European GDP per Capita as a Percentage of the Old EU-15 Average 

(not adjusted for purchasing power parity) 

  2004 2007 2011 2013 2017 

Bulgaria 8.94 11.76 14.99 15. 65 17.88 

Croatia 24.92 28.14 29.47 28.15 29.08 

Czech 

Republic 
30.71 37.37 43.08 41.45 

44.26 

Estonia 23.55 34.46 35.37 39.73 42.28 

Hungary 27.76 28.96 29.4 28.25 30.91 

Latvia 16.88 29.12 27.93 31.16 33.89 

Lithuania 17.85 25.55 29.12 32.54 36.25 

Poland 18.22 23.87 28.18 28.5 30.13 

Romania 9.58 16.81 17.6 19.81 23.51 

Slovak 

Republic 
28.6 33.34 36.94 37.67 

38.26 

Slovenia 46.64 50.15 50.54 48.63 51.28 

Data Source: World Bank, available at: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end= 

2017&locations=GR-PT-DE-AT-FR-BE-FI-LU-SE-GB-NL-ES-DK-IE-IT-LT-PL-RO-SK-SI-BG-HR-CZ-EE-HU-

LV&start=2017&view=bar 

 

Even as absolute income in ECE has trailed its West European counterparts, consumption in ECE 

relative to GDP has rivaled that of the old EU-15 (Deuber 2011). As with measures of income, 

there are competing interpretations of what increasing consumption means, with both supporters 

and detractors of increasing consumption in ECE. On the one hand, expanding consumption 

certainly signals elevated welfare (Farkas 2013). On the other, consumption in the current period 

does not contribute to growth in later periods unless it generates additional income or reduces 

current expenses. If current account deficits are financing consumption, as was the case in the run-

up to the Eurozone crisis, there is potential for volatility and lost opportunity for productive 

investment (World Bank 2012; Jacoby 2014). Andrew Janos had long argued that later 

industrialization and development in ECE compared to the West resulted in increased demand for 

consumption at the expense of financing underlying productive capacity (Janos 2000; Epstein 

2014a). Slow income convergence in absolute terms, in conjunction with relatively high 

consumption in ECE, has been one source of dissatisfaction with East Central European growth 

models; this pattern does not necessarily presage full convergence (Galgóczi and Drahokoupil 

2017). 

Frustration in ECE with income inequality, uneven access to educational and business 

opportunities in the EU, and perceived economic subordination are directly observable in the 

policies and rhetoric of many East Central European countries. In Poland, Hungary, Romania, 

Slovenia, the Czech Republic, and Slovakia, policy-makers have variously tried to domesticate 

foreign-owned services and industry and have imposed taxes targeted at foreign-controlled sectors. 

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2017&locations=GR-PT-DE-AT-FR-BE-FI-LU-SE-GB-NL-ES-DK-IE-IT-LT-PL-RO-SK-SI-BG-HR-CZ-EE-HU-LV&start=2017&view=bar
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2017&locations=GR-PT-DE-AT-FR-BE-FI-LU-SE-GB-NL-ES-DK-IE-IT-LT-PL-RO-SK-SI-BG-HR-CZ-EE-HU-LV&start=2017&view=bar
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2017&locations=GR-PT-DE-AT-FR-BE-FI-LU-SE-GB-NL-ES-DK-IE-IT-LT-PL-RO-SK-SI-BG-HR-CZ-EE-HU-LV&start=2017&view=bar


6      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

At the same time, they have cultivated political loyalty among formerly independent institutions 

such as central banks. They have developed industrial policy apparatuses capable of supporting 

indigenous innovation in the service of domestic investment and ownership, with the goal of 

moving domestic production up the value chain. To be sure, rhetoric has at times been more 

fulsome than policy has been effective. Nevertheless, the re-orientation away from economic 

liberalism and unbridled openness that has occurred since the 2008-09 US and then the European 

financial crises has been notable (see, for example, Johnson and Barnes 2015; Appel and Orenstein 

2018; Greskovits 2019; Naczyk 2019; Piroska and Mérő 2020). 

 

Foreign Direct Investment 

Developments with respect to foreign direct investment (FDI) into ECE have similarly yielded 

decidedly mixed results, with some unanticipated political consequences. FDI has led to increases 

in some wages, technical upgrading in select firms, and overall increased economic output in ECE. 

But because of the absolute output differentials depicted in the previous section, inward investment 

into ECE has been far larger than outward investment. Economic and power asymmetries are the 

result. In particular, the West has been able to avail itself of lower production costs in the East (but 

not vice versa). As such, profit-making, managerial control, innovation, and therefore power have 

accrued to Western countries more readily than to Eastern ones. 

FDI has been large-scale, welfare enhancing, and transformative in terms of technical upgrading. 

Bohle and Greskovits argue that FDI created a ‘manufacturing miracle’ in much of ECE (2012), 

while Medve-Bálint has pointed out that in the aughts and after, ECE was receiving more FDI than 

Brazil, China, India, Russia, or Mexico (2014). Bruszt and Langbein (forthcoming) argue that EU 

membership in connection with the drive for FDI built unprecedented state capacity in ECE. In all, 

one can argue that FDI has contributed to more wealth, improved welfare, and increased 

international linkages for ECE – exactly what had been hoped for by proponents of Eastern 

Enlargement. But FDI has also generated inequality within countries, cultivated East Central 

European dependence on Western investors, and failed to create significant innovation capacity in 

the NMS. While even the most illiberal leaders in ECE have been loath to challenge manufacturing 

FDI (though there have been more explicit challenges with respect to FDI in finance), economic 

nationalism and development initiatives in ECE respond in direct ways to the dissatisfaction 

spawned by FDI’s power asymmetries.  

Power asymmetries are manifest in the ‘dependent capitalism’ in ECE that emerged in the wake 

of state-socialism’s collapse. The origins of this asymmetry rest in part in the huge wealth 

disparities between East and West Europe by 1989, but also in the industrialization and broad-

based education of the communist regimes (Nölke and Vliegenthart 2009; Bohle and Greskovits 

2012). Low-wage but highly educated (in global comparative terms) workers attracted FDI to ECE 

across all economic sectors (Medve-Bálint 2014). Key features of the dependent capitalist model 

included an emphasis on cost competition, not just through low wages, but also through favorable 

tax treatment for multinational corporations (MNCs) (Appel 2011; Galgóczi and Drahokoupil 

2017; Appel and Orenstein 2018). Research and development, including design and engineering 

processes, were concentrated in West European countries from which the FDI flowed. FDI 

financing was also controlled by foreign owners – either through firm financing or through the 

majority foreign-owned banking sectors in most of ECE (Epstein 2008; Nölke and Vliegenthart 

2009). 



7      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

West European FDI, while bringing jobs, capital, and some skills and technology upgrades, also 

posed risks for ECE. For one, the vertical character of investment, with most high value added and 

financing functions concentrated in West European headquarters, meant that Eastern populations 

were working in manufacturing facilities focused on ‘downstream’ assembly and processing, while 

technological skill transfers were limited (Nölke and Vliegenthart 2009). Second, while the direct 

effects of FDI were strong for firms in ECE on the receiving end, the indirect effects for domestic 

sectors were much weaker (Hanousek et al 2011, 20-1). Domestically owned firms in ECE were 

on balance not able to achieve commensurate competitiveness with their foreign-owned 

counterparts (Farkas 2013, 16-17). The cost competition model predicated on low taxes and low 

wages also limited the extent to which ECE could spend more on skills, training, and research and 

development (R&D). That same cost competition model also meant that ECE’s comparative 

advantage was at constant risk of erosion, since higher rates of economic growth in the periphery 

were pushing wages up over time (IMF 2013). While “nationally owned businesses would be 

concerned about these long-term developments” of low levels of spending on training and 

research, as well as declining comparative advantage, “Western headquarters do not care much 

about these tendencies, given their potential to relocate production in the long term” (Nölke and 

Vliegenthart 2009, 687). 

German automotive FDI into the Visegrád 4 (V4)3 confirms arguments above about the partially 

disempowering effects of the kinds of FDI that have penetrated ECE on a large scale. By 2012, 

Germany had 20 percent of the global market in passenger cars. At the same time, approximately 

5.5 million cars were produced in Germany (a figure that had remained essentially constant for 

over a decade), while German firms manufactured over seven million cars elsewhere. Foreign 

production of German cars registered a three-fold increase between 1992 and 2011. Approximately 

three million units a year were produced in ECE in 2012 (IMF 2013, 13, Box 1). For car production 

in ECE, German firms dominated (Pavlínek 2015, 212). 

German automotive FDI was organized according to “vertical specialization” or “fragmentation 

of production” in which lead firms outsourced aspects of production, processing, and assembly to 

gain efficiencies (IMF 2013; Gerőcs and Pinkasz 2019). In practice in ECE, vertical specialization 

referred to activities “under which Germany exports intermediates that are further processed in 

downstream facilities in the EU, including the CE4 [referring to the Visegrád 4] and then re-

exported directly or indirectly outside the EU to the rest of the world” (IMF 2013, 12, First 

Background Note). Thus, highly specialized activities, including design, engineering, and non-

standardized production took place in Germany, while ECE provided assembly platforms for semi-

standardized industrial components. In addition, as German car producers innovated in electric 

engines in the expectation that combustion would eventually be eclipsed, more of the standardized 

production of newer versions of older models with combustion engines was re-located to ECE. 

Higher standardization of production in lower-end models meant decreasing investment per unit 

produced and increasing pressure on returns in ECE (Gerőcs and Pinkasz 2017).  

Workers in investing versus receiving countries have experienced FDI’s power asymmetries 

directly. Whereas in a coordinated market economy like Germany’s, wage and benefits bargaining 

for workers takes place on a sectoral level in connection with a highly centralized national system 

of industrial relations (Hall and Soskice 2001), the cost competition model in the V4 depends on 

firm-level negotiations. This has created competitive and insecure labor markets in ECE, which 

have moderated wage inflation. Over the same period in which Germany’s foreign auto 

 
3 The Visegrád 4 refers to Poland, Hungary, Slovakia and the Czech Republic.  



8      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

manufacturing has increased, the proportion of unskilled workers in Germany has declined and 

unemployment has remained low. Given their broad participation in industrial relations, German 

labor unions have often willingly agreed to the re-location of lower-end production and assembly 

to ECE. German jobs lost in highly standardized manufacturing have been replaced with more 

positions in specialized production, engineering, and design at higher training and compensation 

levels. Germany’s global export power, reflected in successive years of current account and trade 

surpluses, depends on its own wage restraint (Jacoby 2017), but German wages and purchasing 

power remain much higher than equivalent measures in ECE. 

In its own assessment, the IMF highlighted the extent to which FDI, technology transfer to ECE, 

and knowledge-intensive manufacturing there had increased East Central European technological 

sophistication and contributed to income convergence between East and West Europe. However, 

it was probably premature to conclude, as the IMF’s German interlocutors did, that “[p]roduction 

within a vertically specialized chain is not a ‘zero sum game’” (IMF 2013, 14). In a wide-ranging 

dialogue between IMF researchers and policy-makers and industrialists from the V4 and Germany 

in June 2013, three points about regional value chains highlighted power disparities. First was the 

“lively debate” among participants about whether “export growth in knowledge-intensive sectors 

– especially automobile production – really represented technology transfer and human capital 

development, or simply entailed low-skilled assembly jobs within a high-tech industry” (IMF 

2013, 14). Since the IMF researchers themselves pointed to the precarious position of ECE in those 

value chains under conditions of income convergence, and the need for East Central European 

firms to develop their own supply chains to sell intermediate goods downstream “following the 

Chinese example”, even defenders of the FDI model saw a need for more innovative capacity in 

ECE (IMF 2013, 15).  

A second indication that relative gains mattered, and that Germany had the upper hand, was the 

German attitude toward labor mobilization in ECE. As already noted, Germany and its lower- cost 

production chain partners had starkly different industrial relations. German labor unions exercised 

joint authority (with management) over major business decisions, whereas East Central European 

workers only bargained with their foreign owners at the firm level. The V4 were warned, therefore, 

that the “potential gains in employment as a result of production spillovers [from German 

investment] should be kept in mind when considering labor market reforms or during negotiations 

between industry and labor unions” (IMF 2013, 14).  

Third and finally, it was not just labor quiescence that German investors found desirable. Even as 

the IMF was recommending more investment in human capital, skills, and innovation in ECE, 

German participants were emphasizing that nothing along those lines was needed at that juncture 

because “there was no imminent threat to the position” of the V4 in the value chain, “despite 

narrowing cost differentials” (IMF 2013, 14-15). This was akin to the World Bank arguing a year 

earlier that because the European Union was a “convergence machine,” the NMS did not need a 

developmental strategy, or to be “ferocious” like their Asian counterparts. They needed only to be 

“disciplined” to attract foreign investment so that economic development and technology transfer 

could be secured in ECE through “osmosis” (World Bank 2012, 25). Analyses from the IMF and 

the World Bank embraced a division of labor between East and West Europe through FDI that had 

provoked considerable skepticism in ECE by 2010, if not before.  

Foreign direct investment also often produces the unintended consequence of increased inequality 

within countries, which has been the case in ECE (Medve-Bálint 2014). Not surprisingly, measures 

of income inequality have increased in ECE since the transition began. The Gini coefficient, in 



9      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

which zero represents an equal distribution of wealth across a population and one represents wealth 

concentration in one person, is by no means at the high end for much of ECE, with countries such 

the Czech Republic, Slovakia, and Slovenia achieving equal or greater equality than Denmark or 

Sweden. These countries were all below the OECD average of .315 in 2015, and significantly 

below the US (.415 in 2015).4 While East Central European countries such as Poland, Bulgaria, 

Romania, and the Baltic States were above the OECD average in 2015, what might be more 

important than the static comparisons are the trends over time, and the ways in which the sense of 

rising inequality fuels policies that promise to change the status quo. For much of the transition, 

for example, from 1995 to 2016, income inequality within the new EU-13 (all of the post-

communist entrants plus Malta and Cyprus) was on the rise. It was only in 2016 that inequality 

within these countries begins to abate, driven mostly by inequality declines in Poland and 

Romania.5 

Foreign direct investment has had complex effects in ECE that have produced wealth, opportunity, 

and upgrading alongside subordination and marginalization of groups that have not been direct 

beneficiaries of foreign capital. The sense of lost opportunity was therefore palpable in some 

countries – with Prime Minister Viktor Orbán railing against “debt slavery” in Hungary and former 

Prime Minister Jan Krzysztof Bielecki in Poland pointing out that “capital has a nationality” (see 

respectively Johnson and Barnes 2015; Naczyk 2019, 17). In response to perceived dependence, 

these politicians and others have devised economic programs to limit that dependence, engage in 

more welfare redistribution to combat some of the inequality-inducing effects of FDI, and increase 

domestic savings, investment, and innovation. 

 

Financial Integration and Foreign Bank Ownership 

According to one interpretation, EU enlargement, and ECE’s radical economic openness, has 

generated major gains for both East and West in financial integration and foreign bank ownership. 

FDI in East Central European finance brought resources and expertise. Moreover, as documented 

in a recent study (Epstein 2017), ECE’s bank funding stability was far stronger than in Western 

Europe, precisely because of high levels of foreign bank ownership in the East as opposed to in 

the West. Nevertheless, foreign bank presence has been a politically contentious issue in some 

NMS because of the ways in which domestic bank ownership is perceived to provide greater 

economic opportunity and autonomy – a privilege that many West European countries maintained 

for themselves even as Western institutions counseled East European countries to privatize their 

banks with foreign capital (Epstein 2008; 2014b). 

Most countries around the world have long discouraged high levels of foreign bank ownership in 

their domestic markets, preferring to maintain politically susceptible financial institutions in the 

service of protecting the domestic deposit base, securing credit to the local government and 

economy, and insulating themselves against foreign political manipulation (Pauly 1988; Epstein 

2017). ECE proved a major exception to this trend beginning in the 1990s when international 

institutional pressure, banking crises, and a dearth of managerial expertise and capital pushed all 

 
4 Gini coefficient statistics are from the World Bank, available at: https://data.worldbank.org/indicator/SI.POV.GINI 

Accessed 10 January 2020. 
5 Zsolt Darvas, “This is the state of inequality in Europe,” Bruegel and the World Economic Forum, 4 May 2018. 

Available at: https://www.weforum.org/agenda/2018/05/european-income-inequality-begins-to-fall-once-again, 

accessed 10 January 2020. 

https://data.worldbank.org/indicator/SI.POV.GINI
https://www.weforum.org/agenda/2018/05/european-income-inequality-begins-to-fall-once-again


10      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

the post-communist aspirants to the EU except Slovenia to privatize the bulk of their banking 

assets with foreign capital (Epstein 2008). ECE became the most highly penetrated banking market 

in the world, with foreign ownership levels in most cases well over half and in some instances 

approaching 100 percent (see Table 3). The biggest investors were from Austria, Italy, Belgium, 

and France, but banks from Portugal, the Netherlands, Ireland, Germany, Sweden, Norway, 

Denmark, and Greece also had a significant presence in the region. 

Table 3: East Central Europe, New Member States of the EU 

Country Percentage of Foreign-

Owned Banks, Assets: 

2008 and 2013 

Bulgaria 84  70 

Croatia (joined the EU in 2013) 91  90 

Czech Republic* 84  85 

Estonia 98  97 

Hungary 84  84 

Latvia 66  65 

Lithuania 92  93 

Poland 77  68 

Romania 88  89 

Slovakia 99  85 

Slovenia 31  34 
Data Source: EBRD 2009 and EBRD Banking Survey for 2013. *Source for Czech Republic is Claessens and Van 

Horen 2015 because the country exited EBRD programs before this data was collected. 

 

While there is debate about the developmental consequences of high levels of foreign bank 

ownership for ECE (EBRD 2009; Bonin et al 2014), scholars agree that foreign bank ownership 

was a stabilizing force for the region during and following the US financial crisis. Parent banks in 

Western Europe maintained their exposures to ECE through the crisis, re-capitalizing their 

subsidiaries on an ongoing basis. There were no major failures or closures of foreign-owned banks 

during the crisis, though a number of locally owned or managed banks in ECE faced insolvency, 

requiring emergency nationalization, government bailouts, or closure.6 High levels of foreign bank 

ownership in ECE markets stabilized capital flows and limited fiscal fragility for ECE 

governments (Bonin and Louie 2016).  

 

 

 

 
6 Examples of ECE domestic banks that required substantial government assistance or closure included Parex Bank in 

Latvia, a number of the state-owned banks in Slovenia and by 2014, FiBank in Bulgaria. 



11      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Figure 1: Total Banking Assets in the NMS, 2006-2009 

 
Data Source: Schoenmaker and Peek 2014, 6 

 

Stabilization due to foreign bank ownership in ECE through and after the US financial crisis is 

surprising in that it contravened analyst expectations and historical experience. Reflecting back on 

the Asian Financial Crisis of the late 1990s, economist Robert Wade remarked in 2007 that, “No 

country should let its banking system be taken over by foreign banks.” His reasoning was that “at 

times of crisis banks rely heavily on their home state and are likely to sacrifice operations in 

developing countries in order to protect their home base” (Wade 2007, 84). Wade was not alone 

in his skepticism of foreign bank behavior in crises. By 2008-9, countless news articles, blog posts, 

and reports on ECE focused on the seemingly dangerous combination of foreign bank ownership, 

home regulatory pressure, foreign exchange exposure, supervisory prerogatives and escalating 

uncertainty. Paul Krugman, a Princeton University economist and New York Times columnist, 

published a blog post in October, 2008, equating Southeast Asia in 1997 to East Central Europe in 

2008.7 Neither Wade nor his counterparts were exactly wrong. West European banks came under 

precisely the pressure from home governments that Wade specified. The surprise was in the degree 

to which Europe’s transnationalized banks fought back against a national approach to bank rescue 

and enlisted the support of international institutions to try to preserve their market position and 

long investment time horizons in ECE. 

The comparison of funding volatility between East and West Europe adds still more weight to the 

argument that Europe as a whole should seriously consider banking market openness as part of the 

solution to financial and currency instability. In this respect, Eastern Europe is a model for Western 

Europe. Volatility in cross-border funding among West European Eurozone states was far more 

severe than in ECE precisely because foreign bank ownership levels in the West were low. While 

Western Europe presented a veneer of financial integration before the crisis due to high levels of 

cross-border debt, a clear lesson of the crisis is that these flows are prone to retreat behind national 

 
7 See Krugman’s blog post from October 31, 2008: https://krugman.blogs.nytimes.com/2008/10/31/eastern-europe-

2008-southeast-asia-1997/ accessed 20 July 2019. 

0

50

100

150

200

250

300

2006 2007 2008 2009

Total Bank Assets (2006-2009)

Bulgaria

Czech Rep.

Estonia

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

https://krugman.blogs.nytimes.com/2008/10/31/eastern-europe-2008-southeast-asia-1997/
https://krugman.blogs.nytimes.com/2008/10/31/eastern-europe-2008-southeast-asia-1997/


12      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

borders when risk reigns (Deuber and Epstein 2019). That is exactly what happened. For the 

Eurozone, a West European home bias in lending upended the European Central Bank’s monetary 

transmission, compounded downturns, accelerated contagion, and exacerbated bank-state doom 

loops in which government borrowing costs and bank balance sheets both deteriorated at once 

(Epstein 2017).  

In ECE, by contrast, Western banks’ business models made it difficult and costly to indulge a 

home bias in lending. Western bank owners allowed Eastern loan-to-deposit ratios in many 

countries to climb to well over 100 percent. Letting subsidiaries fail, while legal, would have 

damaged relations with host authorities and resulted in existentially threatening losses for those 

Western banks that had spent more than a decade building up mass-market share in the post-

communist world. Retreating to small and overbanked markets at home was never an option. This 

explanation for Western banks’ continuing exposures is at odds with the more widely accepted 

Vienna Initiative explanation – a voluntary bank rollover agreement orchestrated by a range of 

international organizations (Epstein 2014b; 2017).  

Despite widespread skepticism of ECE’s approach to opening its banking markets to foreign 

entrants in the 1990s and 2000s, both from within the region and outside of it, some distinct 

advantages have flowed to ECE as a consequence. Foreign bank acquisition through subsidiaries 

proved stabilizing through the crisis and contributed to higher credit ratings in the region, and 

thereby lower borrowing costs (Grittersová 2017). Foreign owners brought managerial expertise 

and capital. Transnationalized bank ownership also created an interdependence between East and 

West that made it difficult for Western firms to relegate the fortunes of Eastern markets to West 

European economic nationalism. To be sure, foreign banks also brought economic volatility 

through the funding of credit booms (Deuber and Epstein 2019) – a source of vulnerability that 

much of ECE has reduced through lower current account deficits. On balance, however, foreign-

owned banks supported growth and structural cohesion between East and West. Why, then, have 

high levels of foreign bank ownership come under increasing scrutiny since the crisis, with Poland 

and Hungary in particular re-asserting much higher levels of domestic control through ownership? 

As in the other two empirical cases discussed here, income convergence and FDI, the apparent 

economic successes mask deeper power disparities. If states have traditionally tried to maintain 

politically susceptible banking sectors in the interest of credit provision, macroeconomic 

management, crisis response, and power projection, West European states have behaved much 

more conventionally than their East European counterparts. Whereas Table 3 shows very high 

levels of foreign bank ownership in the NMS, Table 4 shows the extent to which West European 

Eurozone states have restricted foreign entry into their banking markets.  

  



13      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Table 4: Foreign Bank Ownership in the 15 Older EU Members 

Country Percentage of Foreign-

Owned Banks, Assets: 

2008 and 2013 

Austria 28  26 

Belgium 14  47 

Denmark (not in the Eurozone) 18  18 

Finland 84  84 

France 6  5 

Germany 12  13 

Greece 14  0 

Ireland 36  36 

Italy 6  6 

Luxembourg 95  92 

Netherlands 2  4 

Portugal 24  23 

Spain 2  2 

Sweden (not in the Eurozone) 0  0 

United Kingdom (not in the Eurozone) 18  11 
Data Source: Claessens and van Horen 2015 

The four largest Eurozone economies are highlighted because Germany, France, Italy, and Spain 

have been purposeful about excluding foreign entrants (Bini-Smaghi 2013; Donnelly 2014; Goyer 

and Valdivielso del Real 2014), as have many other Eurozone countries, with the partial exceptions 

of Belgium, Finland, and Luxembourg (the last of which is a financial center).  

Thus, even if Western banks have brought new technology, funding, and improved credit ratings 

to ECE, there is nevertheless the sense in some East Central European countries that Western 

investment has been exploitative and/or has resulted in lost economic opportunity. The earlier 

reference to former Polish Prime Minister Jan Krzysztof Bielecki’s observation that capital always 

has a nationality is a case in point. Naczyk argues that domestic managers at foreign-owned 

multinational corporations, and particularly at banks, were greatly frustrated by the fact that out-

of-country headquarters always had final decision-making authority. During the crisis of 2008-9, 

even if foreign parent bank recapitalization of local subsidiaries continued, local managerial 

authority was nevertheless curtailed and managerial development was stymied (Naczyk 2019). 

These findings are consistent with earlier research showing both a concern among foreign investors 

that they limit Research and Development (R&D) capacity in host countries by keeping innovation 

capacity at home (Nölke and Vliegenthart 2009) and the continuing national embeddedness of 

capital, particularly among many (but not all) banks (Epstein 2017, chapter 4). 

Foreign bank ownership, then, has had nationalist policy effects. Viktor Orbán’s mortgage 

restructuring schemes that thrust high costs on foreign-owned lenders and Poland’s economic 

development plan under the Law and Justice party both point to the extent to which politicians can 

leverage high levels of foreign ownership in banking (and other industries) to mobilize political 

support for more economically nationalist policies (Bohle 2014; Piroska and Mérő 2020).8 Poland, 

 
8 For a summary of Morawiecki Plan (“Responsible Development Plan”) of PiS (Law and Justice) in Poland, see: 

http://cecgr.com/wp-content/uploads/2017/07/CEC_In_Depth_The_Morawiecki_Plan.pdf. 

http://cecgr.com/wp-content/uploads/2017/07/CEC_In_Depth_The_Morawiecki_Plan.pdf


14      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Hungary, Slovakia, and Romania all implemented bank taxes. In Romania’s case, the bank tax 

(eventually scaled back from the original proposal) was in part to deal with “banking greed.”9 This 

was another recent example of banking’s high political salience – and with good reason. Despite 

relatively propitious outcomes for ECE in the most recent period, foreign bank ownership or 

lending under conditions different from those specified here have often wreaked havoc on host 

markets. Moreover, none of the NMS that are not in the Eurozone have opted to join European 

Banking Union – another sign of the continuing preference in ECE for a national approach to bank 

oversight in the aftermaths of the US and Eurozone economic crises.  

From a liberal economic perspective, the NMS have on balance both followed liberal prescriptions 

and reaped the benefits from doing so. Yet robust electoral support for those same liberal principles 

has not always followed. We would do well to remember Robert Gilpin’s admonishment that the 

problem with liberals is that they take it for granted that all reasonable people agree on the 

unalloyed benefits of enhanced riches, to the exclusion of concerns about power and control 

(Gilpin 1975). The populations of East Central Europe are no less reasonable than anyone else. 

Their economic subordination, its wealth-inducing effects notwithstanding, has led to varying 

degrees of Euro-skepticism, illiberalism, and nationalism, in keeping with a number of other 

advanced industrialized countries. 

 

Conclusion 

Together, EU and NATO membership created a new geopolitical and economic context in which 

the countries of East Central Europe have enhanced autonomy, voice in international 

organizations, access to large and wealthy markets, and significant subsidies in some cases (see 

also Vachudova 2005). To be sure, EU membership encouraged economic openness, but economic 

reformers in ECE at times liberalized even more than was required by international organizations 

(Appel and Orenstein 2018). Liberalization in the form of privatization, freer trade, and foreign 

direct investment have generated income gains, higher consumption, increased credit provision, 

enhanced productivity, and technological upgrades. And yet the political response has been far 

from euphoric. While majorities prefer to remain in the EU in all of the NMS, Euro-skepticism 

and illiberalism also have enormous appeal. The analysis presented here suggests that ongoing 

power differentials between new and old EU members, particularly as they manifest in absolute 

income and the one-way character of foreign direct investment, account for some of the 

disillusionment. Unequal economic positions provide a basis on which populist politicians can 

plausibly argue that East Central European populations are victims who are not reaping the full 

and just rewards of EU membership. 

There are at least two critiques of the claims made here. The first is that dependent capitalism is 

not an accurate way to characterize the relationship between (mostly) Western investors and 

Eastern host markets (Bruszt and Langbein 2020). This approach suggests that there may be 

illiberalism, corruption, and other dysfunction in ECE, but it is not because of economic 

developments or the EU’s liberalizing agenda. On the contrary, while the EU had championed 

liberalization in certain areas, it also has a politically and developmentally based program of 

 
9 See Boris Groendahl, “Romania’s ‘Greed Tax’ Reminds Banks of Eastern Europe’s Risks,” Bloomberg, 19 

December 2019. Available at: https://www.bloomberg.com/news/articles/2018-12-19/romania-s-greed-tax-reminds-

banks-of-eastern-europe-s-risks accessed 21 July 2019. 

https://www.bloomberg.com/news/articles/2018-12-19/romania-s-greed-tax-reminds-banks-of-eastern-europe-s-risks
https://www.bloomberg.com/news/articles/2018-12-19/romania-s-greed-tax-reminds-banks-of-eastern-europe-s-risks


15      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

redistribution through its structural funds program. Even more important, the EU has both actively 

and passively contributed to state capacity building in ECE. Thus the ‘dependent capitalism’ 

literature tends to understate East Central European agency. According to Bruszt and Langbein, 

illiberalism cannot stem from relative deprivation and disempowerment because those are not, in 

fact, features of the current context in ECE.  

A second plausible objection that complements the first is that East Central European skepticism 

of democracy, economic liberalism, and the EU is firmly rooted in domestic politics and history 

(Trencsényi 2014). The communist-era prohibition against thoroughgoing investigations into past 

atrocities, including local populations’ culpability, allowed politicians to take liberties in 

constructing historical narratives. In particular, where political party turnover in the transition 

facilitated the regeneration of formerly communist parties into competitive socialists (including in 

Poland and Hungary), nationalists claimed a viral incursion had poisoned the transition from the 

beginning – and that the virus itself was inextricably linked to liberalism. In addition to 

Trencsényi’s argument about local political discourses concerning communism, transition, and 

culpability, one could also argue that democracy is still comparatively new in ECE and that 

relatively untested democratic institutions are therefore more susceptible to political and partisan 

pressure. 

However, neither of these alternative explanations for illiberalism in ECE necessarily invalidates 

the argument presented here about the salience of perceived economic subordination and relative 

deprivation. The EU can build state capacity and at the same time lack control over purchasing 

power differentials that result in high volumes of net inward investment, brain drain from ECE, 

and high current account deficits in the run-up to the US and European financial crises. Moreover, 

the economic context could spawn more than one kind of narrative about the possibilities and perils 

of economic liberalism. Not just in ECE but in many countries across the globe, critics of economic 

integration and interdependence have made, and won, the argument against liberalism in its many 

forms, at least in the most recent period. The global nature of illiberalism’s rise suggests that 

developments in ECE may not be entirely historically specific. Rather, East Central Europe 

provides the lens through which we might view and come to understand larger global trends, as 

has so often been the case of this part of the world.  

 

  



16      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

REFERENCES 

Appel, H. 2011. Tax Politics in Eastern Europe: Globalization, Regional Integration and the 

Democratic Compromise. Ann Arbor: University of Michigan Press. 

Appel, H. and M. A. Orenstein. 2018. From Triumph to Crisis: Neoliberal Economic Reforms in 

Postcommunist Countries. New York: Cambridge University Press.  

Bini Smaghi, L. 2013. Austerity: European Democracies Against the Wall. Brussels: Centre for 

European Policy Studies.  

Bohle, D. 2014. “Post-Socialist Housing Meets Transnational Finance: Foreign Banks, Mortgage 

Lending, and the Privatization of Welfare in Hungary and Estonia.” Review of International 

Political Economy 21 (4): 913-48. 

Bohle, D. and B. Greskovits. 2012. Capitalist Diversity on Europe’s Periphery. Ithaca: Cornell 

University Press. 

Bohle, D. and B. Greskovits. 2019. “Politicising embedded neoliberalism: continuity and change 

in Hungary’s development model.” West European Politics 42 (5): 1069-1093. 

Bonin, J. P., I. Hasan, and P. Wachtel. 2014. “Banking in Transition Countries.” In The Oxford 

Handbook of Banking, edited by A. N. Berger, P. Molynewx, and J. O. S. Wilson, 963-82. 

New York: Oxford University Press. 

Bonin, J. P. and D. Louie. 2016. “Did foreign banks stay committed to emerging Europe during 

recent financial crises?” Journal of Comparative Economics 45 (4): 793-808. 

Bruszt, L. and J. Langbein. 2020. “Manufacturing Development: How Transnational Market 

Integration Shapes Opportunities and Capacities for Development in Europe’s Three 

Peripheries.” Review of International Political Economy. Forthcoming. 

Claessens, S and N. v. Horen. 2015. “Foreign Banks: Trends, Impacts and Financial Stability.” 

Washington, D.C., IMF Working Paper No. 12/10. 

Deuber, G. 2011. “Post-Crisis Banking Sector Outlook in CEE.” Osteuropa Wirtschaft 56 (3-4): 

169-94. 

Deuber, G. and R. A. Epstein. 2019. “Forward-looking implications of the Vienna Initiative.” In 

Ten Years of the Vienna Initiative, 2009-2019, edited by Mark Allen. Luxembourg: 

European Investment Bank.  

Donnelly, S. 2014. “Power Politics and the Undersupply of Financial Stability in Europe.” Review 

of International Political Economy 21 (4): 980-1005.  

Epstein, R. A. 2008. In Pursuit of Liberalism: International Institutions in Postcommunist Europe. 

Baltimore, MD: Johns Hopkins University Press. 

Epstein, R. A. 2014a. “Overcoming ‘Economic Backwardness’ in the European Union,” Journal 

of Common Market Studies 52 (1): 17-34.  



17      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Epstein, R. A. 2014b. “When Do Foreign Banks ‘Cut and Run’? Evidence from West European 

Bail-Outs and East European Markets.” Review of International Political Economy 21 (4): 

847-877. 

Epstein, R. A. 2017. Banking on Markets: The Transformation of Bank-State Ties in Europe and 

Beyond. Oxford: Oxford University Press.  

European Bank for Reconstruction and Development. 2009. Transition Report: Transition in 

Crisis? London: EBRD. 

Farkas, B. 2013. “Changes in the European Convergence Model.” Monthly Report 1/13. Vienna: 

Institute for International Economic Studies. 

Galgóczi, B. and J. Drahokoupil, eds. 2017. Condemned to be Left Behind: Can Eastern Europe 

Emerge from its Low-wage FDI-based Growth Model? Brussels: ETUI. 

Gerőcs, T. and A. Pinkasz. 2019. “Central and Eastern Europe’s Dependent Development in 

Germany Automotive Value Chains.” Budapest, Centre for Economic and Regional Studies 

of the Hungarian Academy of Sciences – Institute of World Economics. Working Paper No. 

253. 

Gilpin, R. 1975. U.S. Power and the Multinational Corporation. New York: Basic Books.  

Goyer, M. and R. Valdivielso del Real. 2014. “Protection of Domestic Bank Ownership in France 

and Germany: The Functional Equivalency of Institutional Diversity in Takeovers.” Review 

of International Political Economy 2 (4): 790-819. 

Greskovits, B. 2019. “Re-Politicizing Embedded Neoliberalism: Shifting Patters of EU Integration 

and Dependency in the Visegrád States.” Unpublished manuscript. 

Grittersová, J. 2017. Borrowing Credibility: Global Banks and Monetary Regimes. Ann Arbor: 

University of Michigan Press. 

Hall, P. A. and D. Soskice, eds. 2001. Varieties of Capitalism: The Institutional Foundations of 

Comparative Advantage. New York: Oxford University Press. 

Hanousek, J., E. Kočenda, and M. Maurel. 2011. “Direct and Indirect Effects of FDI in Emerging 

European Markets: A Survey and Meta-Analysis.” Economic Systems 35 (3): 301–22. 

IMF. 2013. “German-Central European Supply Chain: Cluster Report.” IMF Country Report 263, 

Washington, D.C.: International Monetary Fund. 

Jacoby, W. 2014. “The EU Factor in Fat Times and Lean: Did the EU Amplify the Boom and 

Soften the Bust?” Journal of Common Market Studies 52 (1): 52–70. 

Jacoby, W. 2017. “Surplus Germany.” 2017 Paper Series, No. 8. Washington, D.C.: Transatlantic 

Academy. 

Janos, A. C. 2000. East Central Europe in the Modern World: The Politics of the Borderlands 

from Pre- to Post-communism. Stanford: Stanford University Press. 



18      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Johnson, J. and A. Barnes. 2015. “Financial Nationalism and its International Enablers: The 

Hungarian Experience.” Review of International Political Economy 22(3): 535-569. 

Mazower, M. 1998. Dark Continent: Europe’s Twentieth Century. New York: Vintage Books.  

Medve-Bálint, G. 2014. “The Role of the EU in Shaping FDI Flows to East Central Europe.” 

Journal of Common Market Studies 52 (1): 35–51. 

Naczyk, M. 2019. “Taking Back Control: Indigenous Managerial Elites’ Push for State-Led 

Developmentalism in Poland’s Dependent Market Economy.” Paper prepared for the 31st 

Annual EAEPE Conference, 12-15 September, Warsaw. 

Nölke, A. and A. Vliegenthart 2009. “Enlarging the Varieties of Capitalism: The Emergence of 

Dependent Market Economies in East Central Europe.” World Politics 61 (4): 670–702. 

Moravcsik, A. and M. A. Vachudova. 2003. “National Interests, State Power, and EU 

Enlargement.” East European Politics and Societies 17 (1): 42-57. 

Pauly, L. W. 1988. Opening Financial Markets: Banking Politics on the Pacific Rim. Ithaca: 

Cornell University Press.  

Pavlínek, P. 2015. “Foreign Direct Investment and the Development of the Automotive Industry 

in Central and Eastern Europe.” In Foreign Investment in Eastern and Southern Europe After 

2008: Still a Lever of Growth? edited by B. Galgóczi, J. Drahokoupil and M. Bernaciak, 

209-255. Brussels: European Trade Union Institute. 

Piroska, D. and K. Mérő. forthcoming in 2020. “Managing the Contradictions of Development 

Finance on the EU’s Eastern Periphery: Development Banks in Hungary and Poland.” In The 

Reinvention of Development Banking in the European Union, edited by D. Mertens, M. 

Thiemann and P. Volberding. Oxford: Oxford University Press. 

Reiter, D. 2001. “Why NATO Enlargement Does Not Spread Democracy.” International Security 

25 (4): 41-67. 

Rothschild, J. and N. M. Wingfield. 2000. Return to Diversity: A Political History of East Central 

Europe since World War II. New York: Oxford University Press.  

Schimmelfennig, F. 2001. “The Community Trap: Liberal Norms, Rhetorical Action, and the 

Eastern Enlargement of the European Union.” International Organization 55 (1): 47-80. 

Schoenmaker, D. and T. Peek. 2014. “The State of the Banking Sector in Europe.” Economics 

Department Working Papers No. 1102. Paris: Organisation for Economic Co-operation and 

Development.  

Trencsényi, B. 2014. “Beyond Liminality? The Kulturkampf of the Early 2000s in East Central 

Europe.” Boundary 2 41 (1): 135–52. 

Vachudova, M.A. 2005. Europe Undivided: Democracy, Leverage and Integration after 

Communism. New York and Oxford: Oxford University Press. 



19      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Vachudova, M.A. 2019. “From Competition to Polarization in Central Europe: How Populists 

Change Party Systems and the European Union.” Polity 51 (4): 689-706. 

Vachudova, M.A. (forthcoming in 2020). “Ethnopopulism and Democratic Backsliding: Two 

Playbooks, One Strategy, Many Sources of Opposition and Support.” East European 

Politics. 

Wade, R. 2007. “The Aftermath of the Asian Financial Crisis: From ‘Liberalize the Market’ to 

‘Standardize the Market’ and Create a ‘Level Playing Field’.” In Ten Years After: Revisiting 

the Asian Financial Crisis, edited by B. Muchhala, 73-94. Washington, D.C.: Woodrow 

Wilson International Center for Scholars. 

World Bank. 2012. Golden Growth: Restoring the Lustre of the European Economic Model. 

Washington, D.C.: World Bank. 

 

 

  



20      Canadian Journal of European and Russian Studies, 13 (2) 2019: 1-20 
ISSN 2562-8429 

 

 

Published by the Centre for European Studies at Carleton University, Ottawa, Canada 

 

Available online at: https://ojs.library.carleton.ca/index.php/CJERS/index 

 

The Canadian Journal of European and Russian Studies (CJERS – formerly Review of European 

and Russian Affairs) is an open-access electronic academic peer-reviewed journal: articles are 

subject to double-blind peer-review. Topics relate to the European Union, its Member States, the 

former Soviet Union, and Central and Eastern Europe. The journal is published by the Centre for 

European Studies, an associated unit of the Institute of European, Russian and Eurasian Studies at 

Carleton University. 

 

CJERS aims to provide an accessible forum for the promotion and dissemination of high quality 

research and scholarship.  

 

Contact: 

Carleton University 

The Centre for European Studies 

1103 Dunton Tower 

1125 Colonel By Drive 

Ottawa, ON K1S 5B6 

Canada 

 

Tel: +01 613 520-2600 ext. 3117; E-mail: CJERS@carleton.ca 

 

Creative Commons License 

 

 
 

https://creativecommons.org/licenses/by-nc-nd/4.0/ 

 

This Working Paper is licensed under a Creative Commons Attribution-Non-Commercial- 

No Derivs 4.0 Unported License (CC BY-NC-ND 4.0).  

 

Articles appearing in this publication may be freely quoted and reproduced, provided the source is 

acknowledged. No use of this publication may be made for resale or other commercial purposes. 

 

ISSN: 2562-8429 

© 2019 The Author(s) 

 

https://ojs.library.carleton.ca/index.php/CJERS/index
mailto:CJERS@carleton.ca
https://creativecommons.org/licenses/by-nc-nd/4.0/

