Download About the Crisis

Overcoming the economic and
financial crisis
Seizing the opportunity for reforming
the global economy
Date: 18 - 19 November 2009
Venue: Hotel Athenee Palace Hilton,
Bucharest
Prof. Palánkai Tibor
The Crisis in the New Member Countries
(Patterns, reactions, need for Reforms)
Tibor Palánkai
Emeritus Professor
Corvinus University of Budapest
Prof. Palánkai Tibor
About the Crisis
It is a crisis of the global system.
It started in the Centrum (USA), and spread over
the world.
Contrary to post-2001 crisis CEE negatively
affected.
About the Crisis
It is a structural crisis, all elements of social
formation are affected:
• Crisis of techno-structure, particularly energy
and environment (unsustainable).
• Crisis of the institutional and regulation system
(so far globally “negative integration” –
deregulation and liberalisation).
• Social crisis, due to large social inequities
created by transformation and globalisation.
Reactions to Crisis in NMSs
• The financial crisis reached also the NMSs. The
collapse of the banking system, was avoided.
• The big dependence (large share) on foreign
commercial banks, both advantage and
disadvantage.
• A certain exchange rate “bubble”, kept under
control.
• Credit crisis has paralysing impacts on real
economy.
Reactions to Crisis in NMSs
Threats and attempts of protectionism, but they
remained limited.
• Only certain sectors and cases.
• The basic trading frameworks (WTO and Single
European Market) were not questioned.
• The danger is not yet over.
Diverging government interventions
The main measures: launching infrastructural
programs, cut in taxes and social contributions,
old car replacement programs, support of small
and medium companies etc.
Discussions about Keynesian type of interventions,
which in globally open economies can be easily
open-ended (particularly for smaller countries),
or Schumpeterian approach, support for
innovation and structural change.
Crisis of Global Car Industry
It has become a typical crisis industry.
• The fundamental restructuring of car industry is
unavoidable (low energy and pollution, electric
cars etc).
• Unclear, how the decisions of major car
companies affect their NMSs investments.
Coping with Energy crisis
NMSc are particularly exposed. Both in terms of
costs, and security of supply.
The share and use of alternative sources is slowly
growing.
They separately are too small and have limited
resources to exercise any impact.
Joint EU efforts would be needed. NMSs could
play an active role.
Joining Euro-Zone
• Most of the NMSs had a chance to introduce
euro by the end of 2000s.
• Except Slovenia and Slovakia this possibility
was missed, it was a mistake.
• Proper national economic policies and political
determination and
• More coherent and far sighted EU policies are
needed.
Social Crisis
• In all NMSs, great majority of the society was
negatively affected by transformation after 198990, and associated also with globalisation..
• The years of tolerance of difficulties faded away,
and the social dissatisfaction and tension
gradually increased („transformation and
enlargement fatigue”).
• Now, aggravated by the present crisis.
• Dangers: populism, growth of extremist forces,
social conflicts, opposition of necessary reforms.
Can „Trend Change” be Assumed?
In spite the re-starting recovery, the crisis would
not be over.
On contrary, the re-emergence of energy or
agricultural crisis could be hardly avoided.
Present structures are unsustainable.
Some feel that a trend change is needed.
That would assume painful adjustments, and
unemployment could persist for more years.
Need for Fundamental Reforms
• Restructuring economies, mainly in terms of
coping with energy and crisis of environment.
• Challenge of knowledge based society. Reform
of education and retraining system.
• Addressing the crisis of governance, on all levels
(local, national, regional (EU) and global).
• Coping with social inequities. More „positive”
social policies are needed, concentrating on
education and retraining, creation of jobs,
supporting of enterprising (SMEs), preserving
health etc.
END
THANK YOU
Prof. Palánkai Tibor