Austerity – Selective Austerity – Non-Austerity: Experiences of Central European EU Members States

Between the 1980s and the financial crisis of 2008 the mainstream economic policy proposals to countries facing macroeconomic imbalances had centred on austerity. Since 2010-2011 judgements on the suitability and effectiveness of austerity measures, however, have started to change giving space to more critical views. Institutions that previously were advocates of austerity policy moved to publish studies suggesting that it may not be the best instrument to be applied in every country regardless of its circumstances.

The strategies regarding austerity measures varied greatly among the Central European EU member states and at least four different models can be discerned. The first one is the ultra-austerity strategy of the Baltic States, the second is the non-austerity policy of Poland, the third one is the cyclical austerity of countries such as in the Czech Republic or Slovakia, and the fourth is the extremely selective intervention of Hungary. An important common framework condition for these countries has been the inflow of relatively large EU funds for development purposes.

This paper attempts to explore the conclusions that can be drawn from the divergent strategies of Central European EU member countries as regards austerity measures or alternative approaches to such measures. The generalisation of suggestions will be difficult given the variety of countries facing growth problems. The paper piles up proposals for a feasible policy mix that may ensure faster economic growth and contribute to the elaboration of a realistic and effective development model in the region.