The EU Factor in Fat Times and in Lean: Did the EU Amplify the Boom and Soften the Bust?

JCMS Special Issue 2014: Eastern Enlargement Ten Years On: Transcending the East-West Divide? Guest Editors: Rachel A. Epstein and Wade Jacoby

Abstract:

This article describes the EU's impact on economic performance in the new Member States since the advent of membership. It first deals with the EU's role in promoting the economic boom that marked the region up to 2007, emphasizing the role of the single market and of the EU in anchoring and encouraging economic policy liberalization. The second section investigates the EU role in buffering the bust that occurred after 2007, looking at structural fund spending and financial sector instruments to enhance liquidity. I argue the EU had a (mostly unintentional) pro-cyclical effect that fuelled the boom and contributed to setting up the region for a very hard fall during the bust. I also show the EU efforts to buffer the hard times were far quicker in the area of structural fund spending compared to very slow and limited innovation in liquidity provision, especially for non-eurozone states.