Conclusions

The progress of each country has been assessed according to the sub­criteria of the Copenhagen economic criteria - the existence of a functioning market economy and the capacity to withstand competitive pressure and market forces within the Union. These sub­criteria were defined in the Commission Communication on Agenda 2000.

The existence of a functioning market economy requires that prices, as well as trade, are liberalised and that an enforceable legal system, including property rights, is in place. Macroeconomic stability and consensus about economic policy enhance the performance of a market economy. A well­developed financial sector and the absence of any significant barriers to market entry and exit improve the efficiency of the economy. The second criterion (`capacity to withstand competitive pressure and market forces within the Union') depends on the existence of a market economy and a stable macroeconomic framework, allowing economic agents to make decisions in a climate of predictability. It also requires a sufficient amount of human and physical capital, including infrastructure. State enterprises need to be restructured and all enterprises need to invest to improve their efficiency. Furthermore, the more access enterprises have to outside finance and the more successful they are at restructuring and innovating, the greater will be their capacity to adapt. Overall, an economy will be better able to take on the obligations of membership the higher the degree of economic integration it achieves with the Union before accession. Both the volume and the range of products traded with EU Member States provide evidence of this.

Taking the two criteria together, it can be said that Cyprus and Malta have confirmed that they are functioning market economies and should be able to cope with competitive pressure and market forces in the Union.

The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia are functioning market economies. There are substantial economic differences among these countries, but provided they continue with, and in some cases reinforce, a number of differing measures detailed in each Regular Report, they should be able to cope with competitive pressure and market forces within the Union in the near term.

Bulgaria is close to being a functioning market economy. Provided it continues implementing reforms and intensifies the effort to remove persistent difficulties, it should be able to cope with competitive pressure and market forces within the Union in the medium term.

Romania does not yet meet either criterion but has, for the first time, made decisive progress towards this objective.

Turkey has been unable to make further progress towards achieving a functioning market economy, notably given the recent crises. Considerable parts of its economy are, however, already competing in the EU market, under the framework of customs union with the EC.

The detailed conclusions on the fulfilment of each sub criterion in each Regular Report can be found in Annex 1; main statistical indicators in Annex 2.

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