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It is expected that the project will contribute to a better understanding of the changing nature of competitive pressure on the enterprise level as a result of the deepening of the process of European economic integration. By providing new insights about this important microeconomic change it will contribute to the policy debate on competition policy in general and, in particular, on competition policy in the EU. These results will also have a specific policy relevance for the accession candidates as the Competition policy chapter is still open in the accession negotiations with all candidate countries.

The competitive pressure in corporate sector affects employees and contribute to the general perception of the market. It may generate or hinder policy steps through which feedback effect can also occur. The project therefore will capture, in an international context, the attitude of the organisations of market players to competitive pressure in the accession countries, as well as the extent to which they facilitate or obstruct structural reforms, the prevalence of market competition and mitigation of the social costs of transformation.

Competitive pressure is most often chanelled by foreign players on the domestic market. It is expected that this project will provide robust evidence on the potential for and exploitation of spillovers in transitional economies.

The most exciting field of research is the link between competition and labour market. We expect to understand better the specific effect of strong competitive pressure on the labour market in accession countries. A disaggregated analysis of these processes will facilitate a macro-economic analysis of employment and wage responses. The combination of the relevant segments of the labour markets will explain the dynamics of the aggregate market during the catch-up process. It can assist public policy to design educational reform to the likely skill distribution emerging from the restructuring process. Easing the rural employment problems in candidate countries - low overall level of employment, and unnaturally high reliance on agricultural employment - may require special institutions, especially if candidate countries want to achieve a significant progress towards the ambitious Lisbon 2000 employment target. International comparison will help to separate policy-specific consequences from the features of the labour markets stemming from general characteristics of transition.

The project will contribute to the EU’s and candidate countries’ policy debate on the social costs or consequences of further liberalisation of markets within enlarged EU, adding the human capital long term dimension to the usual social protection short term approach. The rising poverty rates and increasing income gaps in candidate countries should be addressed from two perspectives: as a consequence of the system’s transition to the market economy and as a heritage-of-the-past revealed. Integration could solve this problem in the long run, but specific actions have to be undertaken in the short run in order to cope with this challenge.

Finally, the relationship between competition and its perception may yield two kinds of results. The first general type of result is a better understanding of the link between competition, income differentiation and subjective welfare. The comparative aspect of the study will be useful in assessing the various links between the nature of competition and subjective welfare. The second type of result is the production of information on accession countries’ situation in terms of public attitudes towards competition, income dispersion and volatility. This information should be useful at a time when important changes have to be accepted by the population in order to meet the accession criteria and the requirements of the “acquis communautaire”.

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Page last modified: 26 January, 2006