Stretching EU Frontiers toward East: The Consequences for Agricultural Trade Integration

In May 2004, ten countries joined the European Union. Most of these countries that are located in the central and eastern part of Europe have different historical background and economic structure, compared to the older EU members. One of the pertinent issues of EU Accession is the economic consequences for the countries neighboring the enlarged EU and the impact on trade of between these countries. The implication of regional economic cooperation and competition for all the EU members and countries located further to the East of EU, including countries in the Middle East and Central Asia in terms of resource allocation, the concentration of economic activities and its welfare implications, all depends upon how the new economic opportunities are exploited. The main purpose of this paper is to measure the degree and extent of comparative advantage in agricultural crop production and to compare the results for the enlarged European Union and countries located further toward the eastern frontier of the EU. The Bowen comparative advantage index as well as a simple regression model will be used in this regard. This paper will highlight the relative strengths and weaknesses of the countries in this ‘bloc” in exploiting their agricultural trade potential.