The economic results of the 2004 enlargement of the European Union

Résumé du document

Two years ago, ten new members joined the European Union out of whom eight were former communist countries. Malta and Cyprus joined the EU in 2004. The fifth enlargement has been the most ambitious in the history of the European Union. It was the largest ever in terms of number of countries (10) and population (75 million) acceding to the European Union. It posed great challenges in terms of disparity of wealth. Achieving the political and economic reunification of Europe 15 years after the fall of the Berlin wall, it was the most symbolic union ever since the creation of the European Coal and Steel Community which had achieved the French-German reconciliation. Nevertheless, the Eurobarometers surveys showed that this strongly symbolic enlargement invited a true enthusiasm neither in old members nor in new comers. Instead, the debate between pros and cons of the process has been mainly argued at the economic level. Western Europeans mainly feared that the enlargement would cause industry outsourcing and immigration of Eastern workers and thus raise the unemployment levels in Western Europe. Many thought that the enlargement would come at a huge cost for the EU budget or would reduce the EU subsidiaries, including the Common Agricultural Policy that they benefited from.

Extraits

[...] Nordic banks are particularly involved in the Baltic States. In conclusion, there is no doubt that the process of integration into the EU has really boosted new comers' economic development. But it was feared that this economic development would be done at the expense of the older Member States whose economic situation was not flourishing. PART Has Western Europe paid the bill for Eastern and Central European economic growth? Western fears were not justified Central and Eastern Europe have benefited from joining the EU. [...]

[...] It is almost impossible to draw conclusions regarding the migration of Eastern European workers to the EU-15 since all but three of the old member states (Ireland, the UK, and Sweden) have applied transitional restriction since May 2004 Other old Member States maintained a work-permit regime combined with a quota system, invoking an up-to-seven-year derogation from the principle of free movement of workers granted by the 2003 Accession Treaty. We can nevertheless notice that migratory flows from the EU-10 have been small, even towards countries that have allowed unrestricted movement of workers. [...]

[...] Taxation levels in the new member states are lower than in the EU-15, but not much. In 2003 (the last year for which comparative figures are available), the ten accession countries collected the equivalent of 36 per cent of their GDP in taxes, compared with just over 40 per cent in the EU-15. There are big differences among the newcomers. Lithuania's tax level is below that of Ireland's (at 29 per cent of GDP), while Hungary and Slovenia collect as much tax as Germany (around 40 per cent). [...]

[...] 77–103 Fontagné Lionel & Landesmann Michael A. Economic Consequences of European enlargement, special issue of Economie Internationale, La Documentation Française, N°102, 2e quarter 2005 Verluise Pierre, Deux ans après l'élargissement de 2004: quel bilan ? interview of Richard Backis, ambassador of Lituanie Les Aspects financiers de l'élargissement européen special issue of La Revue d'Economie Financière, 28 James Owen, low corporate tax rates attract foreign investment? A look at recent evidence for the EU', The Economist Intelligence Unit Country Forecast, Regional Overview Eastern Europe, September 2005. [...]

[...] Since many non-enlargement factors influence economy, it is quite difficult to measure the direct impact of the enlargement the EU- 15. Economists usually assume that there are four channels through which enlargement can have an impact on the economies of the EU-15: trade: the removal of the remaining tariffs and border controls lowers the cost of east-west trade flows; the single market: integrating the new members into the single market increases competition, which result in higher productivity and lower prices; the movement of factors of production: capital moves from west to east and workers move from east to west; financial costs: transfer payments to the new members through the EU budget. [...]