Advanced Search
MyIDEAS: Login

The Fourth Enlargement of the European Union: Austria, Finland, and Sweden Join the EU

Contents:

Author Info

  • Fritz Breuss

    (WIFO)

Abstract

The integration of the rich EFTA countries Austria, Finland, and Sweden into the EU shifts the center of gravity to the North. While the previous enlargement by the "cohesion" countries Greece, Portugal, and Spain was a burden on the budget of the EU, the present enlargement is a relief. The integration of the three neutral countries constitutes no economic problems, but progress in the area of collective security might possibly be slowed down by their accession. Through the fourth EU enlargement the number of countries in the European Union rises to 15. The EU's economic power, as measured by gross domestic product, increases by 7 percent; its population grows by about 6 percent, and its area expands by 37 percent. On a per-capita basis, however, the EU is growing richer by only 0.1 percent (at purchasing power parities) and 0.7 percent (at current prices and exchange rates), respectively; Austria and Sweden but not Finland have a higher per-capita income than the twelve EU members on average. Austria's GDP per head is fourth in the EU, with only Luxembourg, Belgium, and Denmark ranked ahead of Austria. Sweden takes the tenth position, Finland the eleventh. The three former EFTA countries now joining the EU are, with the exception of Finland, small wealthy and highly industrialized countries. They will also, again with the exception of Finland, be net payers in the EU. The three new EU members also have a great deal in common in the political realm: they are all neutral countries. How their neutral status will be handled in the future is an open question. In the WEU, the defense branch of the EU, they have accepted the position of observers. After the treaty of Maastricht the European Union has been composed of "three pillars". The European Communities are the first pillar. The second pillar is the common external and security policy (CESP); the third is the close cooperation in judicial and internal matters. The final goal of economic integration after Maastricht is the creation of an Economic and Monetary Union (EMU). It is scheduled in 1996 (but more likely in 1999) to lead to a single currency in the EU and a common monetary policy, administered by the European Central Bank. The precondition for participation in this third stage of the EMU is fulfillment of the convergence criteria postulated in Maastricht, which will be examined for the first time in 1996. According to current forecast, the only countries which might meet these criteria in 1996 are Germany and Luxembourg. Austria is presently the only country among the new members to participate fully in the exchange rate mechanism of the European Monetary System. Membership in the EU engenders an adjustment of economic policy in many central areas (common external policy, common agricultural policy – CAP, common regional policy, competition policy, and the common monetary policy). The adjustment problems are being acutely felt particularly in the area of agricultural policies where expected income losses are being cushioned by funds from the federal budget. The consequence is an additional burden in the budget which far exceeds the net payments proper (Sch 12 billion) in connection with EU membership. All three EU members have high hopes regarding the integration effects. Economic analyses for Finland, Sweden, and Austria indicate medium-term to long-term positive growth and welfare effects. For Finland and Sweden, the yearly growth gains are expected to be between ½ and ¾ percentage point. For Austria, the growth impulse (counting the effects of membership in the EEA and the EU as well as the effects from the single market) is estimated at ¾ percentage point of real GDP per annum. Inflation is expected to slow down as the single market will stimulate competition in all areas.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.wifo.ac.at/wwa/pubid/157
File Function: Abstract
Download Restriction: Payment required

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by WIFO in its journal WIFO-Monatsberichte.

Volume (Year): 68 (1995)
Issue (Month): 2 (February)
Pages: 105-125

as in new window
Handle: RePEc:wfo:monber:y:1995:i:2:p:105-125

Contact details of provider:
Postal: Arsenal Object 20, A-1030 Wien
Phone: (+43 1) 798 26 01-0
Fax: (+43 1) 798 93 86
Web page: http://www.wifo.ac.at/
More information through EDIRC

Order Information:
Postal: Austrian Institute of Economic Research Publikationsverkauf und Abonnentenbetreuung Arsenal, Objekt 20 A-1030 Vienna/Austria
Email:

Related research

Keywords: Die vierte EU-Erweiterung – um Österreich; Finnland und Schweden; The Fourth Enlargement of the European Union: Austria; Finland; and Sweden Join the EU;

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wfo:monber:y:1995:i:2:p:105-125. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilse Schulz).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.