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Enlargement and the EU Periphery: The Impact of Changing Market Potential

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Author Info
Brulhart, Marius
Crozet, Matthieu
Koenig, Pamina

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Abstract

We study the impact of changing relative market access in an enlarged EU on the economies of incumbent Objective 1 regions. First, we track the impact of external opening on internal spatial configurations in a three-region economic geography model. External opening gives rise to potentially offsetting economic forces, but for most parameter configurations it is found to raise the locational attractiveness of the region that is close to the external market. Then, we explore the relation between market access and economic activity empirically. We simulate the impact of enlargement on EU Objective 1 regions. Predicted market-access induced gains in regional GDP and manufacturing employment are up to seven times larger in regions proximate to the new accession countries than in "interior" EU regions. We also find that a future Balkans enlargement could be particularly effective in reducing economic inequalities among the EU periphery, due to the positive impact on relative market access of Greek regions.

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Paper provided by Hamburg Institute of International Economics in its series Discussion Paper Series with number 26330.

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Date of creation: 2004
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Handle: RePEc:ags:hiiedp:26330

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Related research
Keywords: new economic geography; market potential; EU enlargement; Objective 1 regions; International Relations/Trade; F12; F15; R12;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rikard Forslid & Jan I. Haaland & Karen Helene M. Knarvik & Ottar Maestad, 2002. "Integration and transition: Scenarios for the location of production and trade in Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 93-117, March. [Downloadable!] (restricted)
  2. Marius Brülhart & Rolf Traeger, 2003. "An Account of Geographic Concentration Patterns in Europe," ERSA conference papers ersa03p473, European Regional Science Association. [Downloadable!]
    Other versions:
  3. Behrens, Kristian & Gaigné, Carl & Ottaviano, Gianmarco Ireo Paolo & Thisse, Jacques-François, 2003. "Inter-regional and International Trade: Seventy Years After Ohlin," CEPR Discussion Papers 4065, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Pfluger, Michael, 2004. "A simple, analytically solvable, Chamberlinian agglomeration model," Regional Science and Urban Economics, Elsevier, vol. 34(5), pages 565-573, September. [Downloadable!] (restricted)
  5. Kohler, Wilhelm, 2004. "Eastern Enlargement of the EU: A Comprehensive Welfare Assessment," Discussion Paper Series 26377, Hamburg Institute of International Economics. [Downloadable!]
  6. Raul Livas Elizondo & Paul Krugman, 1992. "Trade Policy and the Third World Metropolis," NBER Working Papers 4238, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Forslid, R. & Haaland, J.I. & Knarvik, K.H.M. & Maestad, O., 1999. "Integration and Transition: Scenarios for Location of Production and Trade in Europe," Papers 13/99, Norwegian School of Economics and Business Administration-.
  8. Monfort, Philippe & Nicolini, Rosella, 2000. "Regional Convergence and International Integration," Journal of Urban Economics, Elsevier, vol. 48(2), pages 286-306, September. [Downloadable!] (restricted)
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  9. Matthieu Crozet ; Pamina Koenig-Soubeyran, 2002. "Trade Liberalization and the Internal Geography of Countries," Working Papers 2002-37, Centre de Recherche en Economie et Statistique. [Downloadable!]
  10. Annekatrin Niebuhr, 2003. "Market Potential and Regional Disparities in Europe," ERSA conference papers ersa03p178, European Regional Science Association. [Downloadable!]
  11. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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  12. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR, CES, MSH, vol. 12(24), pages 125-176, 04. [Downloadable!] (restricted)
  13. Kohler, Wilhelm, 2004. "Eastern enlargement of the EU: a comprehensive welfare assessment," Journal of Policy Modeling, Elsevier, vol. 26(7), pages 865-888, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gianfranco De Simone, 2008. "Trade in Parts and Components and the Industrial Geography of Central and Eastern European Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(3), pages 428-457, October. [Downloadable!] (restricted)
  2. Nuno Crespo & Maria Paula Fontoura, 2006. "Regional Integration and Internal Economic Geography - an Empirical Evaluation with Portuguese Data," Working Papers 2006/25, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
  3. Moritz, Michael, 2008. "Spatial effects of open borders on the Czech labour market," IAB Discussion Paper 200830, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
  4. Jože P. Damijan & Crt Kostevc, 2008. "Trade liberalization and economic geography in transition countries: Can FDI explain the adjustment patterns of regional wages?," LICOS Discussion Papers 22208, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  5. Joeri Gorter & Albert Van der Horst, 2005. "New Economic Geography, Empirics, and Regional Policy," ERSA conference papers ersa05p236, European Regional Science Association. [Downloadable!]
    Other versions:
  6. Annekatrin Niebuhr, 2005. "The Impact of EU Enlargement on European Border Regions," ERSA conference papers ersa05p114, European Regional Science Association. [Downloadable!]
  7. Steven Brakman & Harry Garretsen & Marc Schramm, 2005. "Putting New Economic Geography to the Test: Free-ness of Trade and Agglomeration in the EU Regions," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. Marius Brülhart & Pamina Koenig, 2005. "New Economic Geography meets Comecon: Regional Wages and Industry Location in Central Europe," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.01, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
  9. Candau Fabien, 2005. "Lumpy World and Race to the Bottom," International Trade 0508008, EconWPA, revised 01 Feb 2006. [Downloadable!]
  10. Candau, Fabien, 2006. "Good Governance, Trade and Agglomeration," MPRA Paper 2353, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  11. Miren Lafourcade & Elisenda Paluzie Hernandez, 2005. "European Integration, FDI and the Internal Geography of Trade: Evidence from Western European Border Regions," Working Papers in Economics 145, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
  12. Michael Pfaffermayr & Peter Huber & Yvonne Wolfmayr, 2004. "Market Potential and Border Effects in Europe," WIFO Working Papers 235, WIFO. [Downloadable!]
    Other versions:
  13. Niebuhr, Annekatrin, 2005. "The Impact of EU Enlargement on European Border Regions," Discussion Paper Series 26384, Hamburg Institute of International Economics. [Downloadable!]
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