Germany's economic golden age is coming to an end. Its woes will hit the Visegrad states directly
). The union is peeved by the populist governments in the region, and funds will be redirected away from the comparatively booming central Europeans. Moreover, theThe most popular destination of emigrants from Hungary, Poland and the Czech Republic has generally been Germany in recent years . Eleven percent of Poles and 9% of Czech citizens live abroad. But remittances from the diaspora may now face decline.
Finally, the catch-up effect may also be withering. Poor countries tend to grow faster than rich ones, largely because imitation is easier than invention. Yet once they reach a certain stage of economic development, they tend to get stuck—in the notorious “middle-income trap”. This may become the fate of some of theeconomies. They sorely lack innovative companies; Hungary and Poland in particular spend only 1% of theiraverage.
Visegrad policymakers have come up with several policies to address the labour shortage. One is to increase fertility rates with financial incentives, a policy pursued at great cost but with little effect in Poland and Hungary. Another is to make it easier for women to participate in the workforce, by offering them free or highly subsidised child care. Poland and Slovakia are trying that one, though with only limited success.
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