Transitional Progress and Business Challenges

Eight Central European and Baltic countries have joined the European Union in May 2004. Transitioning economies need to develop a business environment with a healthy financial sector to realize economic growth. This paper uses two classification methods, the discriminant analysis and taxonomic measure, to investigate the possibility of the South Eastern European and Commonwealth of Independent transitional countries to develop an enterprise and business environment that is compatible with the newest European Union (EU8) members. This paper found that the EU8 countries are correctly classified as having transitioned successfully in their business development. Bulgaria and Croatia have transitioned closely to the EU8. However, Romania, Ukraine, and the Commonwealth of Independent countries are not close to the EU8 in achieving a compatible business environment.