Economic Development and Resilience by EU Member States: Volume 115

Purpose: This research delves into the nuanced interrelations between economic globalisation, European integration, and labour market dynamics, specifically focussing on understanding how trade and financial globalisation impact economic growth and the stability of the European Union (EU) labour markets. The aim is to emphasise the multidimensional effects of globalisation and European integration within this context.

Need for study: This research responds to the critical need for an in-depth analysis of these dynamics of globalisation, providing essential insights for informed economic and policy decision-making at the level of the EU in a globalised landscape.

Methodology: This research employs a systematic review and bibliometric analysis to examine a broad range of literature from 1990 to 2023. Analysing over 1,000 academic articles to identify trends in discussions on European integration and globalisation using the VOSviewer tool assesses the relationship between globalisation, European integration, and labour market performance in EU countries using statistical data provided by Eurostat.

Findings: European integration and globalisation continue to open avenues for economic growth while concurrently exposing economies to various risks, including economic instability and wage disparities. Financial globalisation emerges as a dual-edged credential, amplifying global financial risks and influencing income redistribution patterns.

Practical implications: The study emphasises the need for well-crafted policies to address labour market challenges in EU-13 countries. Policymakers should prioritise investment in education, skills training, entrepreneurship, innovation ecosystems, and workforce adaptability. Regional cooperation is also advised to leverage collective strengths, share best practices, and foster solidarity among EU-13 member states.

Purpose: This chapter aims to assess the governance quality (GQ) in the EU-13 member states (MS) over the 2004–2022 period, examining the relationship between GQ and investment attractiveness, measured by foreign direct investment (FDI) inward stock as a % of gross domestic product (GDP). Studies on the relationship of institutions and governance on FDI inflow conducted for the EU-13 MS are relatively rare.

Methodology: First, countries of the EU-13 exhibiting similar levels of GQ (hierarchical cluster analysis) are identified using the Worldwide Governance Index (WGI). We use the values obtained from the authors’ original synthetic index of governance quality (SIGQ) to compare levels of GQ among the EU-13 MS between 2004 and 2022. Third, FDI inflows to the EU-13 MS. Finally, a correlation matrix and contingency coefficients are used to examine the relationship between FDI inflows and groups of countries with similar SIGQ and the relevance of six individual GQ dimensions for FDI inflows in the EU-13 MS.

Findings: The EU-13 MS differ significantly in the overall GQ measured by the WGI. Statistical analysis results are used to validate the hypothesis about a positive relationship between GQ and the inflow of FDI. The approach adopted for this chapter and its value-added lie in dividing the EU-13 MS into groups based on their similar performance concerning GQ (measured by six governance dimensions) and proving that GQ matters for FDI inflows.

Practical implications: High-quality governance can contribute to the investment attractiveness of countries and influence FDI flows, with implications for practice.

Purpose: The objective of this chapter is to provide an international comparative analysis of the economic, social and healthcare inequalities in the European Union (EU) from the perspective of 13 EU member states (EU-13) that have joined the union in 2004, 2007, and 2013.

Need for study: Significant disparities exist in the development levels among various regions and countries in the EU.

Methodology: The study compares EU-13, PIGS countries (Portugal, Italy, Greece, and Spain), and EU-10 over the last 20 years, focussing on income competitiveness, unemployment rates, employment structures in services, industry, and agriculture, and social and healthcare disparities. Data on gross domestic product (GDP) per capita, internet access, and unmet medical needs are also analysed. The Summary Innovation Index (SII) is dynamically analysed to determine the key factors of international competitiveness, including innovation.

Findings: Employment in agriculture in EU-13 countries is five times higher than in EU-10 countries, and income gaps persist between the two regions. However, EU-13 is closing these gaps with PIGS countries. Digitalisation has improved, and there are no visible disparities in internet access. The Human Development Index and unmet healthcare needs are diminishing. Performance groups, such as Innovation Leaders and Strong Innovators, are dispersed across Europe.

Practical implications: This study offers a new research agenda for critically investigating economic, social, and healthcare inequality topics, which are of crucial importance. The findings may serve as the foundation for future cohesion policy development in order to maximise its effectiveness in achieving the EU’s integrity.

Purpose: The economies of the European Union (EU) countries are significantly affected by new developments in technology and digital transformations, requiring tailored policies to bridge gaps and boost economic development. This chapter analyses the impact of the digital economy in EU countries according to the level of economic growth.

Need for study: Assessing the interaction between economic growth and digitalisation, focussing on digital transformations, digital skills, and economic growth, this chapter designs advanced theoretical and empirical research by building on certain important research issues.

Methodology: The research framework relies on assessing the correlation between the Digital Economy and Society Index (DESI) and economic growth. Based on Eurostat data, this research employs panel econometric models to uncover causal relationships between digital policies and economic growth, incorporating macroeconomic variables and country-specific digital policies. The models are designed through the panel-corrected standard errors (PCSEs) method and robust regression with Huber iteration (RRHI) to ensure unbiased and robust estimates.

Findings: Main findings include that digitalisation coordinates and digital skills are essential for improving economic development in the EU, with benefits for economic growth. These advances affect balance and overall performance and can support policymakers in strengthening their understanding of this scientific field.

Practical implications: The degree of development and the underlying technology underlying determine how the digital economy affects economic growth. Decision-makers can utilise these results to improve digital policies within the EU, favourably impacting the economic development of EU member states.

Purpose: This chapter aims to provide a comparative analysis of productivity and competitiveness in 13 new European Union member states (EU-MS).

Need for study: The need for this study is determined by the slow growth of productivity in the EU, the necessity of the ‘productivity renaissance’, and the need for considerable acceleration of productivity growth in the new EU-MS at the lower end. The authors examine the reasons for the productivity backlog in these countries. Latvia, where productivity is among the lowest in the EU, has been selected as a case study.

Methodology: A special methodology has been applied to assess the impact of the redistribution of labour resources on the overall productivity dynamics in the Latvian economy. The core methodological approach used in the study is the method of structural changes’ impact analysis, shift-share analysis. The main sources of the statistical data used in the study are the Central Statistical Bureau of Latvia (2024), the Statistical Office of the European Union (Eurostat, 2024), and the Organization for Economic Cooperation and Development (OECD).

Findings: The findings include the identification of the reasons for low-productivity dynamics, an impact assessment of the COVID-19 pandemic and recent geopolitical factors on productivity, a comparative analysis of productivity trends in 13 new EU-MS, especially in the Baltic states in the international context, specific conclusions on Latvia’s productivity development, and future challenges.

Practical implications: The authors have elaborated policy recommendations for policymakers, which can be used to improve productivity and competitiveness in Latvia and other new EU-MS.

Purpose: This chapter aims to identify the interaction of various aspects of international trade and the impact on economic integration and economic development in the European Union (EU). Foreign trade is essential for the economy of every country, especially for small, open economies, such as several EU member states. International trade characterises economic trends; it is one of the indicators of the balance of payments and reflects the macroeconomic stability in the country.

Need for study: Economic development analysis involves assessing the external balance of each country or the union of countries, such as the EU, with a focus on the analysis of international trade balance and trends, crucial for the stability of each economy and the operation of the single market and economic integration.

Research methodology: Statistical analysis of foreign trade data and the determination of mutual statistical relationships. It evaluates the trade balances of the EU member states, turnover, and international trade within the EU (intra-EU trade).

Findings: The EU’s economic integration is based on single-market principles, ensuring free international trade and a significant impact on future economic growth. Economic openness of each member state, characterised by foreign trade turnover to gross domestic product (GDP), is essential for compliance with optimal currency zone criteria. The EU’s enlargement opened the single market to Central and Eastern European countries, creating conditions for economic transformation and common future development. However, the study confirms significant differences in international trade between new member states.

Practical implications: Ensuring the development of export capacity and justify the need for export support.

Purpose: This chapter analyses the financial sector development indicators of the new European Union (EU) member states, identifying the most important factors affecting their development. It focuses on the 13 new member states of the EU that joined the EU from 2004.

Need for study: Financial sector development has a significant impact on any country’s economy, supporting faster growth of its national economy. It is essential to study the general development factors and individual characteristics of the financial sector’s development in the new EU member countries and evaluate their financial policy decisions during the crisis period.

Methodology: The authors examine indicators characterising the development of the financial market, such as assets to gross domestic product (GDP), loans to GDP, market capitalisation to GDP, the number of companies traded in the capital market, and other indicators. Along with the development indicators, the authors analyse those affecting security and resilience, such as bank capital adequacy, non-performing loan (NPL) portfolio, and others. The research methodology comprises content analysis, logical, constructive analysis, synthesis methods, and graphic visualisation.

Findings: This chapter examines development aspects of the financial systems in the new EU member states, concluding that joining the EU contributed to the successful development of the financial markets and that common financial market principles helped the new EU member states cope with the challenges.

Practical implications: Helpful for financial sector experts and policymakers, findings provide insight into the development trends of financial and capital markets in the new EU members.

Purpose and need for study: This chapter analyses the leading industries in the new European Union (EU) member states, focusing on automotive, information technology (IT), aerospace, textiles, machinery, chemicals, renewable energy, and food and beverages. It compares the 13 new EU countries that joined in 2004, 2007, and 2013, considering factors like industrial diversity, infrastructure, workforce skills, national economic policies, and geographical position. The aim is to enhance the EU’s industrial competitiveness and contribute to overall prosperity and social cohesion.

Methodology: The methodological instruments used in this chapter include literature review, EU documents search, historical analysis, comparative study, data handling, and interpretation.

Findings: A careful look at the top industries of the new EU states and their capacity to increase the EU export potential shows the need for the following measures: digitalisation (growing e-commerce, digital marketing, and data analytics to meet global market demand), the monitoring of geopolitical factors and dynamics of the internal market, the expansion of external economic relations, and the reduction of barriers in global trade. This study finds that the new EU members confronted several challenges and deficiencies over the years, which are highlighted (e.g. outdated infrastructure, skilled labour shortage, environmental issues, bureaucratic hurdles, and lack of transparency in certain areas), along with the associated solutions and initiatives meant to remedy them.

Practical implications: This study derives important practical implications linked to new business opportunities, investment decisions, infrastructure improvement, skills development, and educational policies.

Purpose: This study aims to examine the inferences of climate change risks on the natural environment within the European Union (EU) and to explore how environmental governance initiatives that prioritise sustainability and are globally agreed upon can help mitigate these adverse effects of climate change. This study conducted an in-depth systematic review and comprehensive bibliometric analysis of the scientific literature identifying the theoretical underpinnings of climate change risks and global environmental governance.

Need for study: Climate swaps pose significant risks to the environment, sustainability, and socioeconomic systems at the EU and global levels. Nowadays, every industry, company, and region worldwide is exposed to varying degrees of climate risk, which is only expected to increase as climate change accelerates.

Methodology: An extensive collection of articles, books, and book chapters available through Web of Science and Scopus was analysed, gathering key ideas, theories, directions for future research, authors, research organisations/institutes, nations, and co-citation histories. The research methodology involved was extracting information from 1,586 documents on Scopus and 1,024 papers on Web of Science and processing the data in VOSviewer. The following keywords were used for basic searches and further extraction: ‘climate’, ‘politics’, ‘risk’, ‘global’, ‘environment’, and ‘governance’.

Findings: Governance/management becomes even more important when studying climate change risks along with resilience, adaptation, vulnerability, uncertainty, and sustainability/sustainable development among EU member states.

Practical implications: This study emphasises climate change’s most significant environmental effects and risks at the EU and global levels and highlights the importance of addressing these risks through effective environmental governance initiatives.

Purpose: This study aims to investigate the complex and multifaceted issue of changes in the quality of life of residents of the European Union (EU) member states from a dynamic perspective. This issue encompasses various social, economic, and political dimensions.

Methodology: This study uses the vector measure construction method (VMCM) to compare the quality of life in 27 EU countries since 2004. The VMCM approach, based on vector calculus properties, uses a scalar product to analyse the actual objects of analysis. Indicators such as per capita income, housing conditions, healthcare, education, and social and environmental inequality will be identified. The aggregate measure and available data will be used to create a ranking of the quality of life in each EU country, with the top-ranked country serving as a benchmark for comparison in the second phase.

Results: This study reveals that Ireland, Greece, Cyprus, and Luxembourg are the top performers in quality of life, while Hungary and Bulgaria consistently rank lower. Malta and Estonia show improvements in education, gross domestic product (GDP) per capita, income, and employment rates, while Poland and Spain experience declines. Slovenia is the top performer, followed by Malta and Lithuania, which have improved their ranking over time.

Practical implications: This study underscores the dynamic nature of quality of life and provides valuable insights for policymakers and researchers alike.

Purpose: The primary purpose is to discuss the productivity and digitalisation interaction at the theoretical level, analyse the productivity and digitalisation differences between the European Union (EU)-14 and EU-13 countries, and evaluate the digitalisation impact on the manufacturing sector labour productivity of the EU countries.

Need for study: The average added value created per capita in new EU countries (EU-13) is one-third lower than in old EU countries (EU-14). To increase productivity, manufacturing companies must adapt to modern trends and take advantage of industrial digitisation opportunities. Digitisation can improve production efficiency, reduce costs, and improve product quality, allowing continuous monitoring and analysis of production data, enabling informed decisions and faster problem-solving.

Methodology: Analysis of scientific literature, comparing viewpoints, insights, and conclusions. The empirical study includes calculating rates of change of indicators, differences between EU-14 and EU-13, and structural analysis. The impact of digitisation on the productivity of EU countries is studied by creating a correlation matrix and using regression analysis: ordinary least square models.

Findings: EU-13 countries are behind EU-14 in labour productivity and manufacturing digitalisation. Digitalisation positively impacts productivity per employee. A faster increase in digitisation, industrial robot use, and e-commerce sales could significantly increase productivity in EU-13, reducing productivity differences between countries.

Practical implications: This study highlights the need for policy promoting digitisation innovation, particularly in EU-13 countries, to be implemented by both national and EU-based economic development and regional and cohesion institutions.

Purpose: This chapter analyses the labour market and human capital development in 13 European Union (EU)-adopted countries. It discusses innovative activities for various target groups, addressing demographic challenges and social issues related to labour market developments, highlighting positive experiences and practical solutions for improved human capital development.

Need for study: Demographic challenges, such as ageing societies and information and communication technology (ICT), are causing further stratification in Europe and increasing pressure on human capital development. Positive experiences reduce economic imbalances and achieve sustainability goals in human capital development, including successful application of the ‘silver economy’.

Methodology: Representative data from randomly selected households implemented in all EU and candidate countries using the same Eurostat methodology, and Household Finance and Consumption Surveys conducted in all Eurozone countries, Hungary, and Poland, implemented by national banks and supervised by the European Central Bank, where representative survey data are available for comparative studies.

Findings: Academic researchers are focusing on human capital development for the elderly population, exploring demographic processes and the silver economy to support their labour market involvement. Increased adult education and internet usage in new EU countries show significant income increases, with the highest increase in countries with larger adult education shares. Health issues are also being studied for elderly labour market retention.

Practical implications: This study suggests policy measures to address human capital development issues, particularly in the context of demographic challenges, investing in all age groups, avoiding economic bottlenecks, and preventing burnout to maximise labour market retention. These solutions could enhance Europe’s competitiveness.

Purpose: This chapter aims to understand what convergence means and why it is considered so crucial for the full admission of a state to the European Economic and Monetary Union. Doing this will help understand what considerations of economic theory it is based on.

Need for study: To look into the Maastricht architecture, to point out its fragility during the last crises and the capability of the reforms adopted to reduce it, and to make European monetary union (EMU) more attractive for European Union (EU) members still outside it.

Methodology: The experiences of some countries that joined the EU from 2004 to today will be analysed to propose a synthesis from both a qualitative and quantitative perspective that highlights the paths taken by individual states and the processes currently underway.

Findings: The fragility of the EMU architecture became apparent during recent crises. The European Central Bank (ECB) took on new functions, and it became necessary to establish new financial institutions to operate beyond the Maastricht Treaty. Public budget control rules were suspended during the pandemic crisis, and a one-off transfer among states (Next-Generation EU) was adopted. This was an important precedent, but it was still far from the redistribution among states necessary for a political union.

Practical implications: In Maastricht architecture, there is no room for what is needed most by old and new members, that is, coordinated fiscal policies to stimulate aggregate demand, ensuring persistently high employment and production levels. The paths towards the welfare of European citizens, the increase in the sense of belonging to the same community, attracting new members and supporting financial stability all “converge” on the denominator of the Maastricht fiscal parameters.

Purpose: This study aims to explore universities’ vital role in providing educators, teachers, and learners with the necessary smart specialisation and digital skills to adapt to the learning requirements of the digital era. Additionally, the research aims to evaluate the effects of digitalisation on higher education institutions (HEIs) and analyse their responses to it.

Need for study: Digitalisation is significantly altering the skills demanded by Europe’s workforce for the global economy. As the labour market is reshaped, critical challenges emerge that require a strategic response, in which HEIs have a vital role in providing digital skills.

Methodology: Employed a thorough desk research methodology, scrutinising secondary data from diverse public and private sources. In-depth qualitative interviews were carried out with information and communication technology (ICT) employers, HEI representatives, and policymakers. A bibliometric analysis was also employed to grasp better this topic’s pivotal approach in relevant scientific literature. The Escalator methodology was followed by integrating qualitative and quantitative research using a rigorous five-step approach.

Findings: HEIs can reduce the digital skills gap and labour shortages to meet the demands of the local labour market. They can monitor skills gaps and inform policymakers to make informed decisions.

Practical implications: HEIs can tackle the digital skills gap within the European Union with two measures. Tracer studies can be conducted to monitor labour market dynamics and the insertion of graduates into the labour market. Employer skills surveys can be carried out to assess the skills needs of the industry, overcoming the skills gap and enabling the local labour market to thrive.