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This article starts with the increasing differences between Central and Oriental economies since the beginning of the transition process. The countries that are most favorable to Foreign Direct Investment (Hungary, the Czech Republic and to a lesser extent Poland) enjoy better results than the other countries: they have reaped substantial benefits and many new companies have been set up. As a result all Eastern Europe transition economies are now turning to practices favoring Foreign Investment. In this respect Balkan countries are following suit, with some delay but with a lot of determination, and could learn from the Hungarian experience.

The differences in the transformation process have resulted in a diverging economic development in Hungarian and Romanian regions while their contacts have intensified. The less developed part of a more developed country meets the more developed part of a lesser-developed country. A firm- survey carried out on the two sides of the border between Hungary and Romania shows that firms take advantage of the closeness of the other region, at least in terms of foreign trade. We find no evidence for the migration of the workforce from the lower-salary region toward the higher-salary one. The sample supports the hypothesis that Hungarians from the border region invest in the nearby Romanian region. Although the time of EU accession is far away compared to the time-horizon of firms, substantial changes can be foreseen for the time when Hungary becomes a member but not Romania. Hungary may lose its attractive- ness for Romanian firms as a bridgehead and easily accessible country.

This paper deals with the economic impact of transition in Eastern Europe and the CIS. As a whole, the results are surprisingly bad with most of the countries still under the per capita income of the beginning of the transition, ten years after. We put the poor macroeconomic performances of transition economies in relation with the difficulties these countries face to supply the world market with goods and services that contain high skilled labor and high technology and would allow a progressive increase in value added and real wages. The inefficient and now financially distressed science and technology domestic systems cannot provide much help at the moment. The increased activity of foreign firms and the development of foreign led research can greatly improve the situation in the short run, but raises new concerns as for the autonomy and internal consistency of the national economies.

As the European Union will soon enlarge to ten new members, the question of the future of European policies, in particular the regional policies, remains problematic. The differences in labour productivity between the current applicants are obvious, but these differences are also present between regions of Central and Eastern European countries. In order to study this difference, this paper starts by describing the distribution of GVA, employment and productivity growth across the different regions of Poland, Hungary and the Czech Republic. Next, we improve Esteban's (2000) shift-share analysis to measure how regional productivity gaps are due to differences in industrial mix as opposed to region- specific factors. The results highlight the greater influence of the latter element and therefore support policies benefiting homogenously all the sectors in the least developed regions.