Central to Europe: The Advance of the Visegrád Four

Central to Europe: The Advance of the Visegrád Four

Pre-pandemic economic and social progress looked very good for Czechia, Hungary, Poland, and Slovakia, and troubling for Germany and France. If these trends resume—and there is no reason to think they won’t—the East will soon outshine the West.

THE V4 countries, moreover, have embraced both entrepreneurship and innovation, and they are outpacing France and Germany, sometimes dramatically, in these areas. For instance, it would surprise no one that higher levels of education would help spark higher levels of innovation, but many might be surprised to learn that three Polish cities have larger percentages of people with higher education than either Berlin or Paris, and that the populations of the capitals of V4 countries Czechia, Hungary, and Slovakia have higher levels of post-secondary education than Berlin.

One result is that patent applications increased in 2018 by an average of 21 percent over the previous year across all four Visegrád countries, according to the European Patent Office (EPO), while in France and Germany applications increased by fewer than one (0.95) percent. In France, applications actually fell by 2.8 percent. The best-performing Visegrád country was Hungary, which enjoyed a 26.3 percent increase in applications, while the worst was Czechia (17.5 percent), whose increase in patent applications was still almost four times as great as Germany’s (4.7 percent). The average increase for all thirty-eight state members of the EPO was 3.8 percent. 

The V4 capitals of Budapest, Prague, and Warsaw were ranked in February 2019 among “The Best 50 Cities for a Startup in the World,” according to Valuer, a start-up incubator in Copenhagen, which ranked Bratislava, Slovakia, and Wroclaw, Poland, among “25 Up-and-Coming Startup Cities to Watch.” Speaking of cities, a study of the CEE’s business climate ranked all EU cities of 250,000 or more people by productivity (GDP per person), connectivity, and human capital. Of the top twenty cities, sixteen were in Central and Eastern Europe and eight were in the V4.

Manufacturing, in general, is stronger in three of the V4 countries than it is in France, Germany, and, indeed, most West European countries, according to one very reputable industry study. Cushman & Wakefield’s “2020 Global Manufacturing Risk Index” ranks Czechia, Hungary, and Poland among its top twelve countries, alongside the United States and China. Germany is ranked alongside Slovakia in its third tier, while France is ranked in the fourth tier along with nine other West European countries.

With so much business activity, corporate aviation is soaring in the V4 countries. While growth in the size of aviation fleets declined 1.7 percent on average across Europe since 2017, they jumped 41 percent in Czechia and 37.5 percent in Poland. Looking forward, Central and Eastern Europe has almost two aircraft on order for every five aircraft in service, indicating much greater ambitions for growth than Western Europe, which has ordered just over one aircraft for every four in service.

Higher rates of technological adaptation in the V4 countries are driving higher rates of innovation and entrepreneurship. The adoption of digital technologies across all major EU industries, for example, is higher in Czechia, Hungary, and Slovakia than in France or Germany, according to a 2019 survey of 13,500 firms across Europe by the European Investment Bank (EIB). The EIB ranked Czechia among Europe’s top five “frontrunner” countries; Slovakia placed among the next nine “strong” countries, Hungary led the next category of eight “moderate” digitizing nations—outperforming France and Germany in this same category—and Poland lagged in the middle of the final seven countries with “modest” levels of digitalization. Czechia and Slovakia also rank above the EU average, while France and Germany rank behind it.

These statistics are even more striking in light of the fact that, according to the EIB study, “larger firms have higher rates of digital adoption than smaller firms,” and Western Europe’s much larger and more mature economy likely has many more larger firms, on average, than Central and Eastern Europe. Digitalization matters because, according to the study, “Digital firms perform better and are more dynamic: they have higher labor productivity, grow faster, and have better management practices.”

The technologies being adopted in CEE countries include both hardware and software. Czechia, Hungary, and Slovakia, for example, rank in the top one-half of countries using industrial robots, according to the HSBC Global Research report, based on the ratio of robots per worker, and Slovakia ranks even higher than France in its usage of robotics. Broadband speed is higher in Hungary, Slovakia, and Poland than it is in France or Germany. Moreover, Czech cyber-security group Avast was in 2018 the largest tech initial public offering on the London Stock Exchange.

Perhaps innovation and entrepreneurship are flourishing in Central Europe because one of the V4 countries outranks Germany in measures of economic freedom, and all four of them outrank France, according to the Heritage Foundation’s “2020 Index of Economic Freedom.” The index places Czechia and Germany in the “mostly free” category, but with Czechia out-ranking Germany. The index ranks the other V4 countries as “moderately free,” along with France, which is outranked by the entire quartet of V4 countries in the annual study’s twelve measures of economic freedom. The V4 still have progress to make, according to the annual competitiveness rankings of the World Economic Forum and the Swiss research group, IMD, but they are gaining on a Western Europe whose competitive position is stagnant or declining.

THE MOST significant violation of the law in the EU also had the largest negative consequences, yet it is hardly even acknowledged that there was something rather willful about German chancellor Angela Merkel’s very personal decision in 2015 to allow more than one million migrants into Europe. What followed were waves of violence and terrorism not seen in Europe since World War Two, the rise of new populist and Euro-skeptic parties, and a steady string of electoral defeats for Merkel that stalled any new leadership initiatives by Berlin or Paris.

Two years after her decision, the German Bundestag concluded there was no legal basis for Merkel’s decision, and her government offered none. She neither put the issue to the EU nor the Bundestag but simply discussed throwing open Europe’s borders with a few aides. A detailed report by Der Spiegel said Merkel ignored pleas by her Interior Minister and the head of the German Federal Police that she stiffen border controls. She also violated both Germany’s asylum laws and the EU’s “Dublin rule,” which agreed that all migrants be returned to the EU country-of-entry. Perhaps most important, EU treaties do not call for open borders on Europe’s frontiers.

Merkel later made it plain that the decision was purely personal. In an interview with a German newspaper in August 2017, she said—referring four times to her decision’s personal nature—“I’d make all of the important decisions of 2015 the same way again. It was an extraordinary situation, and I made my decision based on what I thought was right from a political and humanitarian standpoint” (italics added).

MERKEL’S DECISION prompted a surge in terrorism, which the V4 countries avoided. The vast majority of deaths and injuries from terrorism in Europe were due to jihadist terror during the period 2011–2019. The data shows clearly that terrorism spiked in 2015, the year Merkel opened Europe’s doors. The number of jihadist incidents (completed, failed, or foiled attacks) jumped from four in 2014 to seventeen in 2015. Deaths shot up from four to 150, and arrests ballooned from 395 to 687. By 2019, all three data points remained dramatically higher than before 2015.

France in particular ranks first among European nations for jihadist violence, but Western Europe generally sees a great deal more terrorism than does Central Europe. Of the seventeen jihadist attacks across Europe in 2015, fifteen of them occurred in France, where 377 people were arrested for jihadist-inspired terrorism. Germany was among six other West European countries that had between twenty and seventy-five jihadist-related arrests.

The V4 countries, on the other hand, had five arrests among them and zero attacks.

More recently, France ranked first and Germany second for completed, failed, or foiled jihadist attacks (seven) in 2019, and Western Europe accounted for seventeen of eighteen jihadist incidents that year. France also ranked first for jihadist arrests, with 202 in 2019, and Germany came in third, with thirty-two arrests (Spain was second with fifty-six suspects). West European countries accounted for 411 of Europe’s 436 arrests of jihadist-terror suspects in 2019. That year, the V4 countries arrested a mere three suspects.

Of course, France and Germany have much larger populations than the V4 countries, but the annual ratio of terror arrests during the period 2017–19 ranged from 1:179,357 people to 1:331,188 in France, while the highest annual ratios in any V4 country ranged from 1:2.6 million people in Czechia to 1:9.6 million in Poland.

Terrorism has not been the only consequence of the migrant crisis. About 1,200 women were assaulted by as many as 2,000 men on New Year’s Eve 2015 in Cologne, Hamburg, Duesseldorf, Stuttgart, and other German cities, according to the national police. Holger Münch, president of the German Federal Crime Police Office, said, “There is a connection between the emergence of this phenomenon and the rapid migration of 2015.” In a related development, female genital mutilation is growing dramatically in Germany due to immigration, increasing by 44 percent since 2017, according to German Minister Franziska Giffey, who issued a report in June 2020, citing greater immigration from countries where the practice is common.