NDLI: An Incumbent Country View on Eastern Enlargement of the EU Part I: A General Treatment

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An Incumbent Country View on Eastern Enlargement of the EU Part I: A General Treatment

Content Provider	Springer Nature Link
Author	Kohler, Wilhelm Keuschnigg, Christian
Copyright Year	2000
Abstract	An eastern enlargement of the EU, from an incumbent country point of view,involves a fiscal burden from extending Union agricultural and cohesion policiesto new members, coupled with potential gains as well as adjustment problemsderiving from an extended customs union and a larger single market. Enlargementis controversial, because the net effect is unclear, a priori, and will certainly vary across individual countries. Our two-part contribution tries to do shed light on this controversy. In this first part, we present a general treatment of the likely effects on different incumbent countries, while a subsequent companion paper will take a closer look at the specific case of Austria. The general view of part I, in turn, first focuses on various empirical measures highlighting crucial differences between incumbents, pertaining to the fiscal burden on the one hand, and integration gains on the other. We then argue that a proper evaluation must rely on an explicit welfare criterion, and we use a general model of economic integration in order to identify the principalchannels through which aggregate welfare of an incumbent country is affected by an enlargement of the EU. We address traditional effects of trade creation and trade diversion, as well as growth effects arising from an abolition of trade barriers. In addition, we ask how enlargement affects foreign direct investmentand labor migration, and what this implies in welfare terms for an incumbent western European country. Taken together, these effects generate a certain presumption of integration gains, which need to be set against the fiscal burden. However, a final judgement requires a case-by-case approach, based on empirical implementations of enriched and parameterized models for specific countries. The companion paper, therefore, uses a suitably specified, calibrated dynamic equilibrium model, in order to take a closer look at the Austrian case.
Starting Page	325
Ending Page	351
Page Count	27
File Format	PDF
ISSN	03408744
Journal	Empirica
Volume Number	27
Issue Number	4
e-ISSN	15736911
Language	English
Publisher	Kluwer Academic Publishers
Publisher Date	2000-01-01
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Economic Growth Industrial Organization International Economics Political Science
Content Type	Text
Resource Type	Article
Subject	Geography, Planning and Development Development Economics and Econometrics

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