The Visegrad Group is an alliance of four Central European states – Czech Republic, Hungary, Poland and Slovakia. There are three main reasons why interest in the Visegrad Group has been rapidly growing. First, the economic one. Since political transition, which began in 1989, those four countries reached a much higher economic growth rate than other Central and Eastern European countries. After joining the EU (European Union) in 2004 and entering the European Single Market, the Visegrad Group countries have been regarded as a successful model of economic development. They are also evaluated as the most prominently potential region for further growth along with BRICs, and Turkey due to a satisfactory economic growth and prospect of investment. The second reason is that these countries have continued to stand as a bloc of 'Collective Action' within the EU through their strong political solidarity. Even after their accession to the EU, their collective action  is expanding to include the fields of science and technology, education, border controls, and social development policy. Their collective action strategy is strikingly noticeable in the process of distributing the EU Structural Fund. This kind of strong cohesion qualifies them as an independent political actor. Finally, and perhaps most significantly, the Visegrad Group plays a special role in Korea – EU relations. However, there has not been much research carried out about this region in Korea. Hence, there is a growing need to conduct a research on the Visegrad Group.
Currently, 28 member states of the EU have exercised significant political and economic influence as a 'United Europe' in the last 25 years after the end of the Cold War. Therefore, it is impossible to understand today’s Europe without examining its integration issues. Research on the Visegrad Group should be also viewed from the context of the whole European integration process. Accordingly, this research focuses on how the Western Europe-led Integration order has affected the four countries in the Central Europe. Twenty-five years after the end of Cold War and ten years after the EU accession, this analysis adheres to the point of view that the changes in the economic and social structure in the four countries and their locational competitiveness should be understood within the 'United Europe'. Only such an approach can help to accurately explain the political and economic status and role of the Visegrad Group.
The European Integration process has been reflecting newly constructed elements following changes in the situation. It was very important to note that some countries in Central and Eastern Europe entered the European Integration order in 2004, 15 years after the end of the Cold War. And these new elements provided a positive mood in the process of the escalation of the European Integration. After an entry into the European Integration order, the political and economic status and the role of Central and Eastern Europe have significantly changed based on a 'United Europe' over the last 10 years. Current EU regional integration is something higher than just ‘Economic Union’. These four countries share their fate with the EU by mutual relationships. It is impossible, therefore, to explain the political and economic status and strategic value of Central and Eastern Europe by disassociating these regions from Europe as a whole.
Even since the four countries in Central Europe joined the European Integration order in 2004, they have been in the process of convergence to a 'Standard Model' of Western Europe through the continued macroeconomic policy changes. These four countries have consolidated their position as 'Factories of Europe' in the last 20 years of continued economic growth after the system transition. Assuming the average economic level of the 28 EU member states as 100, Poland scored from 43 in 1995 to 68 in 2013, Czech Republic scored from 77 to 80, Slovakia scored from 48 to 76, and Hungary scored from 52 to 67 in the same period. In 1995, an average GDP per capita of four countries was only ??3,305, but it increased about 3.6 times to ??11,895 in 2013. Also, there has been a remarkable change in industrial structure of the four countries after the system transition that included primary industries such as agriculture and fishery. Changes in trade structure consisting of the core of the four countries' external economic relations are also noticeable. Visegrad Group had mainly traded with countries in the Communist bloc before the system transition. However, currently main trade is carried on within other EU member states. It is impossible to consider the economy of these four Central European countries without the EU. AS a result of the integration, the four countries in Central Europe have been gaining importance in the European economy over the years.
Despite the growing homogeneities within the Western Europe-led integration order, the four countries in Central Europe still display some differences. These countries still have lower average income level than Western Europe, and their economic structures have not reached the level of those advanced countries yet. Nevertheless, these four countries proved that they have a significant strategic value with a high economic growth rate after the system transition. Furthermore, as the four countries entered EU, their strategic value has raised. This is because the status of these four markets has changed in the European Integration process. This situation also results from the strengthened locational competitiveness of these four countries.
In regard to the integrated Europe, locational competitiveness of four countries in the Central Europe is determined not only by economic factors, but also by political and geographical factors. Regarding the economic factors, the four countries have relatively lower wage levels than Western Europe, relevant size of domestic market, and economic dynamism compared to the neighboring countries. They also record only 32-44% of the EU's average labor charge per hour, while their total population is comparable to France and the United Kingdom. In addition, as the EU member states, these four countries accomplish a comparatively higher economic growth rate benefitting from the EU Structural Fund. Aside from the economic factors, these countries promote institutional cooperation amongst themselves through a strong political solidarity. Politically, they also tend to take collective actions. As far as geopolitical factors are concerned, they have advantages of locational competitiveness as they are positioned to connect the Western Europe to Russia in the continent. This locational competitiveness provides many advantages for the development of manufacturing as well as logistics industries. Thus, the mix of three factors determines the locational competitiveness of Visegrad Group.
Locational competitiveness of four countries in Central Europe is demonstrated by FDI inflow trend. Since the market economy was introduced after the system transition, increased FDI inflow in these countries has had positive effects to GDP, R&D, and an increase in employment rate. Even though their FDI inflow drew downward curve for a while due to 2009 Economic Crisis, their proportion of FDI inflow has risen approximately threefold from 2007 to 2012 in comparison to the all EU member states. Proportion of these countries in FDI inflow recorded double digits in the whole of EU. These are critical data to explain why the Visegrad Group is an emerging region with locational competitiveness. Of course, it is impossible to explain high level of locational competitiveness only with statistical data. It is true that they have endeavored to achieve goals autonomously. During the period of 25 years after the system transition and ten years of accession to EU, these countries have prepared particular strategies. They also have actively endeavored to attract foreign capital by cash grants, special taxation, and various incentive systems. In conclusion, the four countries in Central Europe have been experiencing changes in economic-industrial structure and locational competitiveness due to the objective factors such as the system transition of the last 25 years and accession to the EU in 10 years, as well as autonomous efforts of each country.
The auto industries of the four countries in Central Europe have been one of the most notable sector in regard to locational competitiveness since the 25 years of system transition and 10 years of accession to EU. During this period, the proportion of these countries have rapidly expanded among European automobile manufacturers. Automobile manufacturing has switched from former major automobile manufacturing countries such as France and Italy to Central Europe dubbed as an emerging market. Automobile manufacturing in these countries by multinational corporations of Western Europe has increased rapidly, and this helps the auto industries of the Central Europe to be integrated into the Global Value Chain.
The importance of this region has to be understood in a relationship with the EU member states because these four countries cannot be separated from Europe as a whole. Thanks to the Korea-EU FTA agreement in 2010, the bilateral relations were formally upgraded. At first, there were growing expectations that these bilateral FTA would bring economic growth, trade expansion, improved market rationality. However, against the initial anticipation, Korea's market share in the internal EU market dropped from 2.6% in 2009 to 2.1% in 2013 since the Korea-EU FTA formally went into effect in 2011. Contrary to the expectations, Korea had a ??4.1 billion trade deficit toward EU in 2013.
The Visegrad Group has a growing importance in Korea’s exit strategy from its trade deficit against EU. Korea could resolve itsproblems related to the EU by expanding trade and investment in these four countries in Central Europe as a detour.
Trade between Korea and the Visegrad Group has rapidly increased after the system transition, from the early of 1990s, and accession to the EU in 2004. Korea's total exports toward the four countries in the Visegrad Group recorded 9.1% of the total exports toward EU. This fell short for France (9.5%), but this was larger than the United Kingdom (8.9%) and Italy (8.5%). The four countries in Central Europe took 9% of Korea's import toward EU, and this was also the fourth largest volume following Germany, France, the United Kingdom, and the Netherlands. It clearly shows that Korea's trade policy toward four countries has changed after the system transition and accession to the EU.
The most notable point is that trade with the Visegrad Group has increased rapidly not only in terms of trade volume, but also in trade content which is in favor of Korea. Korea has had substantial trade surplus with these countries unlike trade with other EU member states after the Korea-EU FTA. This trade surplus is because export volume has steeply increased in contrast with the import volume that has stagnated at certain level after 2003. Korea had more than $9.8 billion trade surplus toward the four countries in Central Europe in 2013.
However, it is difficult to overcome structural problems of Korea's trade deficit with the EU as a whole because this trade surplus of relatively small size is only limited to a certain number of countries in Central Europe. Considering the fact that population of these four countries in the Central Europe constitutes 12.7% of the total EU population, and these four countries are demonstrating the highest economic growth rate among 28 EU member states, it shows that Korea's strategy vis-a-vis Visegrad Group certainly needs an amendment. In order to maximize the effect of Korea-EU FTA which came into force in July 2011, trade needs to be expanded to actively utilize these countries in the Central Europe. As a result, it will help Korea to diversify its trade partners, which are currently concentrated to the major Western European countries.
When it comes to the proportion of export items, trade structure between Korea and the EU, and between Korea and the four countries in Central Europe shows some similarities. This is because Korea's structural problem of export toward the whole EU is also reflected in its trade with the four countries in Central Europe. However, when considering trade with these four countries in detail, it turns out that daily supplies, plastic, rubber, leather products and other consumer goods take significant proportions as they are linked to their specific development level and needs. This shows that structural problems in Korea's trade with the EU as whole can be partially resolved by actively exploiting the current trade modus operandi with the Central European countries.
The expansion of local production through active FDI is also important in order to expand trade volume and maintain stable market share in Visegrad Group which still deems an emerging market. From 2004 to 2013, Korea invested ??3.2 billion in the Central and Eastern Europe. This figure takes only 11% against the ??28.8 billion of investment in all the EU member states. Among Korea's total FDI (??28.8 billion) in the EU, the top five countries are the United Kingdom, Netherlands, Germany, Ireland, and Belgium and these countries take 76% of total FDI (??21.9 billion). When considering the status of the Visegrad Group in the Europe as a whole, it is clear that more active investment strategy should be implemented in this region. Furthermore, it is necessary to fully understand the changes in the four Central European countries, to prepare suitable strategies in order to maximize the strategic value of the four emerging Central European countries.