The Central and Eastern European new Member States of the European Union (CEECs) went through the transition process following the commandments of the Washington Consensus, which gradually evolved into the "integrative growth model". External liberalisation exposed the CEECs to recurring problems over external imbalances, bubbles driven by capital infl ows, and resulting growth instabilities. Large foreign direct investment infl ows attracted by repressed wages and low taxes do not accelerate

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... owth. Arguably, real convergence would be much faster under a system with built-in limitations to free trade, free capital movements -and with more scope for traditional industrial, trade, incomes, and fi scal policies.