The enlargement process  The coming EU enlargement to Central, Southern and Eastern Europe countries is a historic stage in European integration. Twelve countries from central, eastern and southern Europe are currently negotiating accession to the EU. According to the calendar endorsed by the European Council, new st accessions will take place as from 1 of January 2004. It testifies again, if necessary, to the  BIS Review 60/2002  3  attractiveness of the European framework, which has contributed to both political stability and economic progress for almost half a century in Western Europe. Accession countries in western Europe have accomplished remarkable progress in stabilizing and strengthening their economies and institutions. Recent history shows the major improvements those countries have made, in hardly 10 years, on the road towards convergence with the EU. Let’s keep in mind, with some humility, the sometimes rather slow pace the current Member States took, regarding for example trade openness, price liberalisation, structural reforms and even monetary stability and fiscal soundness. Nevertheless, there is also general agreement on the fact that the gap, in terms of average GDP per capita, between the accession countries and the euro area, although diminishing, remains still quite significant. The size of the gap, combined recently with a rather limited growth differential between the two groups of countries, suggests that the process of real convergence will be gradual and will have to continue much beyond the tentative dates for EU accession.
In my view, three other major prerequisites are needed in order to foster robust, sustainable growth and durable job creation, namely : the continuation and strengthening of a policy designed to keep in check unit production costs, the improvement of the competitiveness of the economy, through ambitious structural reforms and lastly, the completion of a fully integrated European capital market. Raising the potential output growth and enhancing the competitiveness of the economy: If Europe wants to secure sustainable growth at levels that are as high as possible, the key variable is potential output growth. The level of potential output growth can firstly be raised thanks to investment: business leaders are completely free to invest wherever they want in Europe or elsewhere in the world. It is thus important that we create economic, legal and fiscal conditions that are as favourable as possible to investment in Europe. The investment appeal of Europe is crucial in this respect : the more we invest, the fewer inflationary pressures we will have, and the stronger potential output growth will be. BIS Review 60/2002  1  Another way of raising potential output growth is to increase the quantity of available labour and to boost gains in labour productivity: the fast transformation of information systems is likely to accentuate the structural transformation of the economies.