Foreign Trade Policy and Exchange Rate Regimes in Eastern European Transition and the Effect on EU Accession
Abstract
The European Union is expanding to include Central and East European countries,
eight of which were inducted last May. Before receiving membership in the organization,
these transition countries must first demonstrate a functioning free market economy. This
paper investigates the effect of foreign trade policies and exchange rate regimes on
transition, specifically on output growth and macroeconomic stabilization. Examples are
taken from two new EU member countries: Poland and the Czech Republic; as well as
two candidate countries: Romania and Turkey, to illustrate these effects. By looking to
these countries, it is possible to reason which policies and procedures are most effective
for gaining EU accession, and what measures should be considered by candidate
countries.