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Nominal convergence and real economic convergence in terms of economic policy effectiveness under globalization and euroization-experience of Bosnia and Herzegovina and Ireland

The future of the EU, and of the new-members of the EU, will crucially depend on "real economic convergence" of the new members with "old" members ; that is, upon growth rates and quality (structural evolution) of respective economics. "Catching up" might be attained, according to one brand of economic thought, following the rules of "Washington consensus" or "Augmented Washington Consensus" as specified by (Rodrik 2003). Main-stream followers such are: Srinivasan, Frankel, Bagwaty (Srinivasan 2001), Kruger, (Fisher 1987), Sachs and Werner(1995), Summers (Rodrik 2003) the IMF, suggest: foreign trade liberalization, deregulation, privatization, free flow of capital, FDI, free market as a main driving forces of convergence and of "catching up". Second group of economists: Rodrik (1999, 1997), Panic (1991, 2003), Murakami (1996, Sachs(1987), Fisher (1987), Adelman (2001), Bairoch and Kozul (1996), Stiglitz (2002), Tobin, Klain, Arow, Ellerman (2001), Krugman (1999, 1994) rise different arguments. They do not consider "real convergence" and "catching up" as easy and automatic processes. Simple membership to the EU, without successful "catching up" of developed by less developed members could lead in the long run to divergence instead of to convergence between "old" and "new" members of the EU, and consequently it could lead to "democratic deficit", and Balkanization of the EU (Yugoslav syndrome).

economic policy; globalization; euroization; limits

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