A workshop on European economic interaction and integration has been held to consider the role of competition in economic transition and integration of central and east European countries (CEE).
The first session was devoted to the discussion of the theoretical framework of competition. The simple virtues of perfect competition are apparently being supereeded by a more pragmatic approach based on what can be seen to happen in the real world, in particular, the increasingly complex and international evolution of economic organizations as power centres.
The second session was on the role of competition in the transition of CEE countries to market economies. It was recognized that liberalization of trade in some of the CEE countries was badly prepared, accomplished in a rush, and with increasing difficulties in the wake of economic decline, could lead to a reversal of the liberalization process. In addition, liberalization of imports coincided with the rapid decline of domestic production and of domestic consumer demand. This has had an adverse impact not only on existing (state owned) enterprises but also on small and medium sized (private) firms. Neither excess supply nor privatization of state enterprises have led to a more responsive, more competitive behaviour of firm. Various elements of competition should be implemented simultaneously: privatization with breaking down monopoly positions; gradual trade liberalization; strengthening of small and medium sized competitors; legal and institutional requirements for controlling competition rules.
The third session was devoted mainly to competition policies within the European Community (EC) and focussed on the feasibility of the European monetary union (EMU), institutional and structural changes required for a wider community and regional problems in a more integrated Europe. The growth in the size and scope of community legislation will make the process of accession to the EC more complex. Also, although access is primarily a political, not an economic decision, in reality poorer applicants have to consider if, with free competition within the Community area, they can hope to survive in many sectors against much stronger competitors.
The workshop allowed the CEE participants to comprehend the important role of competition in the transformation process but pointed to its limits in practical application during transition. Without domestic and foreign competition the supply responses necessary for structural renewal in the CEE countries may not be forthcoming at all. Also organization plays an essential role in market economies.