46th Congress of the European Regional Science Association: "Enlargement, Southern Europe and the Mediterranean", August 30th - September 3rd, 2006, Volos, Greece
The literature on transition distinguishes between two groups of transition countries: the Central and East European transition countries have been put into two groups, the seven South-East European countries (SEEC-7)1 and the five Central European countries (CEEC-5). The former group is generally less developed, receives less FDI and is more backward in terms of transformation than CEECs, which also became the EU members. However, fifteen years of transition have brought about tremendous changes, driven by broad economic reform programs, including changes in fiscal and monetary policy, widespread privatization, price and trade liberalization, and new regulatory approaches in those countries. But, if the number of population in SEECs is only twenty per cent lower than in the CEECs, the overall GDP of the former group is one third of the latter's. The analysis of the real sector shows that the macro-stabilization program agreed with the International Monetary Fund have aimed at decreasing inflation and unemployment budget deficit and equilibrating the balance of payments had brought good results in the first group of countries, but not in the second group. According to analyze of the CEECs and their experience, an increase of the FDI inflows could be crucial for the catching-up process and international competitiveness of the SEECs.