Boarding the euro plane: Euro adoption in the Czech Republic and Slovakia

Abstract

What explains euro adoption strategies in the Czech Republic and Slovakia? How have each of these two countries performed under the regime they joined (Czech Republic: Flexible exchange rates; Slovakia: In the euro area)? How has that experience affected Czech and Slovak policies towards euro adoption and their performance during the euro crisis? This paper asks these questions and seeks to give an answer to the question of why Slovakia adopted the euro while the Czech Republic did not. We address these questions by taking an eclectic approach that draws on constructivism, domestic politics, and political economy. The paper examines five explanations based on these theoretical approaches: The inferiority-superiority factor; European identity and the “return” to Europe; the symbolic factor of the currency; euroskepticism; and economic structure and trade relations. We find that each of the five explanations enriches our insight into these matters. But if forced to choose, we find that an explanation drawn on a domestic politics approach contributes the most to our overall understanding of euro adoption policies in the two cases.