Authors

Junchi Ma¹;  ¹ Institute of European Studies, Chinese Academy of Social Sciences, China

Discussion

The paper employs the theoretical framework of late-development advantage to reconfigure the catch-up process of NMS in European economic integration via the lens of economic history to provide another viewpoint on the NMS catch-up process. Between 1820 and 2018, NMS's economic performance fluctuated cyclically, failing to catch up. According to the Angus Maddison database, the proportion of Polish GDP per capita to Western Europe's grew from 35.5% to 61.4% between 1820 and 1920, reaching 69% in 2018, a rise of only 8.4%. The Hungarian index peaked at 62.1% in 1920 and 64.4% in 2018. The Czechoslovak one never recovered from its peak of 76.8% in 1950. The paper argues that the failure to catch up stems from NMS's participation in multiple economic integrations since the nineteenth century, including customs unions with empires, COMECON, and the European single market, according to the definition of economic integration by Bela Balassa. 
On the one hand, the NMS's failure to display the well-recognized late-mover advantage is due to the substitution of external markets and capital for internal ones, the latter of which is critical for catch-up growth. The external element brought by the economic integration shields the NMS from crises and competition. In the long run, substitution in economic integration is a hindrance, not a solution. The single market and potential Economic and Monetary union may present a significant disadvantage for countries with less developed economies, as it involves a higher level of economic integration, as noted by Bela Balassa. 
On the other hand, the NMS cannot escape their reliance on economic integration. Unlike Western Europe during its catch-up expansion, the NMS lacked strong private sectors and banking institutions. Economic integration is the most efficient and quickest means to uncover alternatives. This would allow external capital to enter the NMS's agricultural and industrial sectors, replacing scarce native resources and substituting domestic demand. As a result, despite the fact that the Hungarian Orban Viktor government and the Polish PiS government have caused numerous frictions with the EU and Western Europe, they have never claimed to be leaving the EU.
Last but not least, the paper discusses the impact of economic integration on catch-up growth, specifically the peculiar conditions that comparatively backward countries experience within the group of wealthy countries. The paper also emphasizes the disadvantages that latecomers experience due to their backwardness. This involves not only the failure to replicate institutional systems, as Xiaokai Yang points out, but also the obstacles created by economic integration itself, which is especially important for NMS, whose path-dependency extends beyond a history of empires, communism, and democracy.