Competitiveness strategies, resource struggles and national interest in the new Europe

Based in principle on a case study of Hungary, this paper raises important questions about the ability of Central and East European states to achieve their competitiveness goals within the framework of EU membership. While more conventional views tend to suggest that the EU policy framework represents a “best strategy” scenario for these countries, this paper fundamentally questions this view. Based on an analysis of both the competitiveness strategies pursued by Hungary prior to EU membership, this paper suggests that Hungary was forced to abandon many of the more successful tool employed prior to and during the accession process.

Whether the EU policy framework is likely to represent a positive trade off depends in many ways on the degree of real flexibility within the EU policy framework and the willingness of the Old Member States to continue funding the goals of economic and social cohesion. Through an analysis of the EU structural and cohesion funds, the current drive for tax harmonization and finally competition and state aid policies in the EU, this paper suggests that ongoing debates within the EU emphasize the competitiveness concerns of the more economically advanced states and illustrate only moderate dedication to the goals of economic and social cohesion.

As a result, this paper raises important questions about the degree to which EU membership genuinely represents an optimal strategy choice for the New Member States. In some ways, EU membership provides an opportunity for the more advanced Old Member States to control the policy strategies employed by the New Member States. In this regard, EU membership imposes important constraints on the ability of the New Member States to pursue independent policy agendas. Just as importantly this paper suggests that a new North/South (or now East/West) divide may be opening in the European Union across which the competitiveness interests of different states are likely to fuel policy debate for some time to come.