Europe was and continues to be a hotbed of revolutions. The fall of the Berlin Wall has prompted a wave of civil uprisings all throughout Eastern Europe (from the Velvet Revolution of Czechoslovakia to the Bloody Revolution in Romania) and the ripple effects of this historic change continue to make a mark today – e.g. the street protests in Moldova, or the Orange Revolution and the recent Maidan Revolution in the Ukraine.
What people have paid less attention to is the Silent Revolution that has been unfolding since the fall of the Berlin Wall. While less dramatic in its manifestation, this revolution has started to change Europe – both at the fringes and at its core, and may well shape the World of tomorrow. It is a revolution that promises to offer critical answers on what it takes to put a country on a sustainable development path.
The first signs that something was changing in Eastern Europe were felt somewhere around the year 2000. Emerging from a tough transition decade, the former centrally planned countries in the region entered the New Millennium poised to shift completely to market run economies. This shift was accompanied by robust and sustained economic growth throughout. Part of this growth spurt was favored by a booming global economy and by the expansion of natural resources exports. However, the seed of sustainable growth was firmly planted in some of these countries – the prospective EU Member Countries.
The countries that have expressed an interest in joining the EU have embarked on a path of deep and wide-sweeping institutional and legislative changes. The purpose of those changes went well beyond a mere harmonization of bureaucratical processes. They were meant to strengthen market systems in the New Member States and allow them to sit on their own feet, with the hope that they will help make the European Union stronger. And so they did.
From 2000 onwards, these economies have virtually exploded, with all of them registering annual growth rates of the GDP well above the average for the EU as a whole. Moreover, all of these countries have drawn closer to the development level registered in Western Europe. They have converged to the EU mean – one of the key goals of the EU for New Member States.
Because of this power to help countries shift from a developing state to a developed state, the World Bank has dubbed the EU the Convergence Machine. For all its faults and shortcomings, the EU has managed a feat that should serve as an inspiration to the developing world and the developed world alike. It may be the biggest bureaucracy in the World, but it is a system that works. It works exceedingly well if you look at the national level numbers, and it is even more impressive if you dig deeper and look at the performance of the main growth engines in these countries.
As economic geographers have known for a long time, economic growth does not have the same amplitude across geographic space. There are usually a number of economic growth engines (usually the larger cities in the country) that grow at a much faster rate than the rest of the economy. The faster these economic growth engines grow the faster do the benefits spread to neighboring regions, and eventually to the rest of the economy.
The main economic growth engines in New Member States are usually the capitals. They amass a significant share of a country’s economy, and are usually the most important contributors to a country’s growth – from around 22% of the GDP growth in Poland to a whopping 63% of the GDP growth in Hungary. Their overall economic performance in recent years is nothing short of spectacular, but they have received very little attention in recent years. The latest EuroStat data may change this.
A break-down by region of the GDP per Capita (at Purchasing Power Parity) in 2011, indicates that within a decade, these Eastern European cities have managed to overtake the economic powerhouses of Western Europe. Now Warsaw has a GDP per Capita (PPP) larger than that of London, Prague does better than Vienna, and Bucharest outperforms Rome, Madrid, Berlin, Athen, and Lisbon.
GDP per Capita (PPP) in selected EU Cities, in 2011
This reshuffling of hierarchies may seem hard to believe. However, a seasoned traveler can compare how these cities present themselves today, and how they looked ten years ago. I myself have witnessed this change first-hand after returning to Bucharest after spending 10 years in the US. I was welcomed back by a bustling city, which seems to teem with life and opportunities. I truly felt like there is a Silent Revolution going on in Europe, with the EU as the main instigator.
The opinions expressed by the author are personal and do not reflect the official position of the institutions mentioned above.
