A Lesson from Romania for the European Budget

IN THE EASTERN EUROPEAN COUNTRY, INTERNAL DISPARITIES HAVE FAVORED THE BIRTH OF POPULISM, AS CARLO ALTOMONTE EXPLAINS

The income disparity across regions is one of the causes of the rise of populism in Eastern Europe. These disparities are very often rooted in history as in the case of Romania studied by Carlo Altomonte. After the fall of the Berlin Wall, the transition to a market economy has benefited the country that took advantage from financial resources transferred from Western Europe. The growth was geographically unbalanced, though.

“Every Romanian region was different”, professor Altomonte says. “For strategic reasons, in many Eastern European countries heavy industry was located near the Soviet Union border, where factories could be defended more effectively”. Investments in service and technology-intensive sectors in big cities drove the country’s growth after the fall of the Berlin Wall. Meanwhile, in industrial areas, multinationals were restructuring their operations. This led to job losses and rise of political tension. For this very reason, the European Commission allocated 345 billions in 2007-2013 to correct for these regional disparities.

“Regional disparities across Eastern Europe have contributed to the emergence of anti-European parties. The allocation of the European funds has reduced these disparities, yet they persist. This must be taken into account in the management of the European budget 2021-2027. Lowering resources for regional development could be dangerous”.

Read more about this topic:
That Formidable Year: More Than the Wall Fell in 1989. By Andrea Colli
How the United Nations Regained Its Centrality
The Labor Market and the Costs of Unification
Eastward expansion has changed the face of the Union

by Claudio Todesco