The countries of Central and east Europe in the last 2 decades have narrowed the distance to the developed EU-15 'old' countries. This advancement can be called an economical miracle, but now there are many fresh challenges facing the countries of the region. The most crucial are energy transformation, demography and the skillful usage of artificial intelligence. Researchers from the SGH draw 3 possible scenarios for the improvement of the region's economies. In their view, the key to further improvement will be to overcome organization barriers and to increase innovation.
– The economical situation of this part of the region is not bad and this shows all economical indicators. We are increasingly catching up with the old countries of the European Union, the distance between our economies and the economies of the 15 "old" EU countries is decreasing, although there are any challenges – says Newseria news agency Dr. Piotr Wachowiak, Prof. SGH, Rector of Warsaw School of Economics.
– It seems to us that the definition of an economical miracle, especially in the context of Poland, in which economical growth was fastest, but besides in another countries of the region, is justified – adds Dr. Piotr Maszczyk, Head of the Macroeconomics and Economics Department of the Public Sector at the Warsaw School of Economics.
Eleven countries in Central and east Europe achieved the highest GDP growth rate of all capitalism models in the EU between 2004 and 2024, with an average of 3.2% per year, almost 3 times more than in the EU-15 (1.2%). In the study of the SGH and the economical Forum, 2025 authors calculated that during this time there was a spectacular scale of real income convergence. After 21 years of EU membership, the countries of the EMW-11 have over 31 percent points of improvement distance to the EU-15, reaching an average of 75.2% of their GDP per capita. The fastest convergence process was recorded in Romania (45 pp.) and Lithuania (40 pp.), followed by Bulgaria (33 pp.) and Poland (30,5 pp.). The main driver of GDP growth was the increase in productivity of manufacturing factors, which increased on average by 1.4% per year, contributing to 45% of GDP growth.
According to economists, this success was achieved by developing a model of alleged patchwork capitalism, consisting of loosely related elements taken over from different regimes (feudalism, socialism or capitalism).
– Patchwork capitalism seems to exhaust its ability to make further growth due to various factors. We usage this word "institutional shortsightedness" – it was easy to trim to 75 percent, but as those who are acquainted with the word "average improvement trap", jumping over the last 20 or 25 percent points can be very difficult. And that will not work if the negative elements of patchwork capitalism in Central and east Europe neglect to eliminate, for example, the innovation of these economies cannot be increased. – emphasizes Dr. Piotr Maszczyk.
Artificial Intelligence (AI) technologies are a possible catalyst for growth in the region of Central and east Europe, which can contribute to GDP growth of 90-100 billion euros per year (5%) and in a script that is up to 8% of GDP per year. However, Poland has a double gap in the implementation of the AI and digital competences against the EU, with a percent of only 5.9 percent of Polish companies implementing the AI against 13.5 percent of the EU average.
– More emphasis should be placed on the fact that more and more companies are implementing and utilizing this tool of artificial intelligence, due to the fact that this could give us a competitive advantage in the future – emphasizes Prof. Piotr Wachowiak.
The economists of the Warsaw University of Economics emphasize the importance of expanding funds for investments, due to the fact that so far the economical improvement of Poland has been based and is (as the latest figures of the Central Statistical Office in the second 4th of 2025 show) mainly on consumption. In CEE-11, the share of R & D spending (1.28% of GDP in 2023) is twice as low as the EU-15 average (2.17%), which is simply a barrier to innovation.
– We will not be able to accomplish the level of the "old" Union if we are not more innovative, due to the fact that we will not accomplish an increase in wages without an increase in added value in the business sector, and we will not accomplish an increase in added value without innovative products. In value creation chains we are manufacturers of final goods components and produce goods that are medium-level carriers – explains the Head of the Department of Macroeconomics and Economics of the Public Sector in the SGH. – On the 1 hand, we must decision towards the beginning of the value chain, namely innovation, investigation and development, but on the another hand besides towards the end of this chain, which means we must have more and more products that have our Polish brand. In a somewhat metaphorical way, alternatively of producing doors and bacon in cars or in passenger aircraft, we request to start producing products to which we will attach our own logo.
The study presents 3 scenarios for the further improvement of 11 economies of Central and east Europe: the base, informing and optimistic.
– In the baseline scenario, we presume that the current pace of the real convergence process, namely catching up, will slow down, which will mean that for another 10 years the European Union countries from the Central and east Europe region will not be able to catch up with the EU-15 – informs Dr. Piotr Maszczyk. – In the informing scenario, we will have not so much to do with the convergence script as with the diversification scenario, which means that compared to the current GDP per capita, this average will be lower in 2035. Interestingly, 1 of the exceptions in this pessimistic script is Poland, which will be able to increase this relation by 5 percent points.
The optimistic script assumes that the countries of our region will be able to overcome the organization constraints on the improvement of this patchwork capitalism, which, according to the authors of the report, is already exhausting its ability to make further growth. The basic request for this script to come actual is more money spent on R & D, not only by the public sector but besides by the business sector.
– If this happened, within 10 years, on average, both the group and the Polish economy will accomplish GDP per capita according to the purchasing power parity characteristic of the EU-15 – evaluates the head of the Department of Macroeconomics and Economics of the Public Sector in the SGH.
Other challenges facing the countries of Central and east Europe include energy transformation and demography.
– erstwhile it comes to energy transformation, we request to think about how to diversify energy sources in order to reduce their costs. – says the Rector of SGH. – Another problem is demographics and less and less young people, so smart migration policy, due to the fact that without abroad workers, neither we nor another European countries can manage. Smart migration policy will bring together competent people who will rapidly adapt to further conditions, especially social and cultural conditions.
For: newseria.pl
