IDEAS home Printed from https://ideas.repec.org/a/kap/empiri/v27y2000i4p325-351.html
   My bibliography  Save this article

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

Author

Listed:
  • Wilhelm Kohler
  • Christian Keuschnigg

Abstract

An eastern Enlargement of the EU, from an incumbent country point of view, involves a fiscal burden from extending Union agricultural and cohesion plicies to new members, coupled with potential gains as well as adjustment problems deriving from an extended customs union and a larger single market. Enlargement is 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 principal channels 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 investment and labor migration, and what this implies in welfare terms for an invumbent 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-base 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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Wilhelm Kohler & Christian Keuschnigg, 2000. "An Incumbent Country View on Eastern Enlargement of the EU Part I: A General Treatment," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 27(4), pages 325-351, December.
    • Handle: RePEc:kap:empiri:v:27:y:2000:i:4:p:325-351
    DOI: 10.1023/A:1010929126735
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1023/A:1010929126735
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1023/A:1010929126735?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. George J. Borjas, 2021. "The Economic Benefits from Immigration," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 13, pages 411-430, World Scientific Publishing Co. Pte. Ltd..
    2. Baldwin, Richard E. & Forslid, Rikard, 2000. "Trade liberalisation and endogenous growth: A q-theory approach," Journal of International Economics, Elsevier, vol. 50(2), pages 497-517, April.
    3. Gasiorek, Michael & Smith, Alasdair & Venables, Anthony J, 1992. "`1992': Trade and Welfare; A General Equilibrium Model," CEPR Discussion Papers 672, C.E.P.R. Discussion Papers.
    4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    5. Baldwin, Richard E. & Venables, Anthony J., 1995. "Regional economic integration," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 31, pages 1597-1644, Elsevier.
    6. Keuschnigg, Christian & Kohler, Wilhelm, 1996. "Commercial policy and dynamic adjustment under monopolistic competition," Journal of International Economics, Elsevier, vol. 40(3-4), pages 373-409, May.
    7. 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, CESifo, Sciences Po;CES;MSH, vol. 12(24), pages 125-176.
    8. Baldwin, Richard E, 1992. "Measurable Dynamic Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 162-174, February.
    9. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
    10. P Krugman & Anthony J. Venables, 1993. "Intergration," CEP Discussion Papers dp0172, Centre for Economic Performance, LSE.
    11. Horn, Henrik, 1983. "Some implications of non-homotheticity in production in a two-sector general equilibrium model with monopolistic competition," Journal of International Economics, Elsevier, vol. 14(1-2), pages 85-101, February.
    12. Christian Keuschnigg, 1998. "Investment Externalities and a Corrective Subsidy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(4), pages 449-469, October.
    13. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    14. Bhagwati, Jagdish & Greenaway, David & Panagariya, Arvind, 1998. "Trading Preferentially: Theory and Policy," Economic Journal, Royal Economic Society, vol. 108(449), pages 1128-1148, July.
    15. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ben J Heijdra & Christian Keuschnigg & Wilhelm Kohler, 2014. "Eastern Enlargement of the EU: Jobs, Investment and Welfare in Present Member Countries," World Scientific Book Chapters, in: European Economic Integration, WTO Membership, Immigration and Offshoring, chapter 2, pages 37-83, World Scientific Publishing Co. Pte. Ltd..
    2. Anders Due Madsen & Morten Lobedanz Sørensen, 2002. "Economic Consequences for Denmark of EU Enlargement," DREAM Working Paper Series 200202, Danish Rational Economic Agents Model, DREAM.
    3. Torstein Bye & Erling Erling Holmoy, 2010. "Removing Policy-based Comparative Advantage for Energy Intensive Production: Necessary Adjustments of the Real Exchange Rate and Industry Structure," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 177-198.
    4. repec:dgr:rugccs:200213 is not listed on IDEAS
    5. Kohler, Wilhelm, 2004. "Eastern enlargement of the EU: a comprehensive welfare assessment," Journal of Policy Modeling, Elsevier, vol. 26(7), pages 865-888, October.
    6. Kohler, Wilhelm, 2004. "Eastern Enlargement of the EU: A Comprehensive Welfare Assessment," Discussion Paper Series 26377, Hamburg Institute of International Economics.
    7. Wilhelm Kohler, 2003. "Eastern Enlargement of the EU: A Comprehensive Welfare Assessment," Economics working papers 2003-16, Department of Economics, Johannes Kepler University Linz, Austria.
    8. May Justin B, 2010. "Trade and Migration in an Enlarged European Union: A Spatial Analysis," Global Economy Journal, De Gruyter, vol. 9(4), pages 1-40, January.
    9. Torstein Bye & Erling Holmϕy, 2010. "Removing Policy-based Comparative Advantage for Energy Intensive Production: Necessary Adjustments of the Real Exchange Rate and Industry Structure," The Energy Journal, , vol. 31(1), pages 177-198, January.
    10. Anders Due Madsen & Morten Lobedanz Sørensen, 2002. "Effects of Trade and Market Integration in a Small Open Economy - A Dynamic CGE Approach," DREAM Working Paper Series 200203, Danish Rational Economic Agents Model, DREAM.
    11. Kohler, Wilhelm K., 2004. "Eastern Enlargement of the EU: A Comprehensive Welfare Assessment," HWWA Discussion Papers 260, Hamburg Institute of International Economics (HWWA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keuschnigg, Christian & Kohler, Wilhelm, 1996. "Commercial policy and dynamic adjustment under monopolistic competition," Journal of International Economics, Elsevier, vol. 40(3-4), pages 373-409, May.
    2. Baldwin, Richard E. & Forslid, Rikard, 2000. "Trade liberalisation and endogenous growth: A q-theory approach," Journal of International Economics, Elsevier, vol. 50(2), pages 497-517, April.
    3. Ben J Heijdra & Christian Keuschnigg & Wilhelm Kohler, 2014. "Eastern Enlargement of the EU: Jobs, Investment and Welfare in Present Member Countries," World Scientific Book Chapters, in: European Economic Integration, WTO Membership, Immigration and Offshoring, chapter 2, pages 37-83, World Scientific Publishing Co. Pte. Ltd..
    4. Wilhelm Kohler, 2000. "Die Osterweiterung der EU aus der Sicht bestehender Mitgliedsländer: Was lehrt uns die Theorie der ökonomischen Integration?," Economics working papers 2000-01, Department of Economics, Johannes Kepler University Linz, Austria.
    5. Kohler, Wilhelm, 2004. "Eastern enlargement of the EU: a comprehensive welfare assessment," Journal of Policy Modeling, Elsevier, vol. 26(7), pages 865-888, October.
    6. repec:hal:spmain:info:hdl:2441/6493 is not listed on IDEAS
    7. Wilfried Puwein & Fritz Breuss & Peter Huber & Peter Mayerhofer & Gerhard Palme & Fritz Schebeck & Jan Stankovsky, 2002. "Auswirkungen der EU-Erweiterung auf die Wirtschaft Österreichs," WIFO Studies, WIFO, number 23169, April.
    8. Forslid, Rikard & Haaland, Jan I. & Midelfart Knarvik, Karen Helene, 2002. "A U-shaped Europe?: A simulation study of industrial location," Journal of International Economics, Elsevier, vol. 57(2), pages 273-297, August.
    9. Puga, Diego & Venables, Anthony J., 1997. "Preferential trading arrangements and industrial location," Journal of International Economics, Elsevier, vol. 43(3-4), pages 347-368, November.
    10. Helena Marques, 2008. "Trade And Factor Flows In A Diverse Eu: What Lessons For The Eastern Enlargement(S)?," Journal of Economic Surveys, Wiley Blackwell, vol. 22(2), pages 364-408, April.
    11. Wilhelm Kohler, 2000. "Die Osterweiterung der EU aus der Sicht bestehender Mitgliedsländer: Was lehrt uns die Theorie der ökonomischen Integration?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 1(2), pages 115-141, May.
    12. Molana, Hassan & Montagna, Catia, 2006. "Aggregate scale economies, market integration, and optimal welfare state policy," Journal of International Economics, Elsevier, vol. 69(2), pages 321-340, July.
    13. Willenbockel, Dirk, 2004. "Specification choice and robustness in CGE trade policy analysis with imperfect competition," Economic Modelling, Elsevier, vol. 21(6), pages 1065-1099, December.
    14. Paolo Epifani, 2003. "Trade liberalization, Firm Performances and Labor Market Outcomes in the Developing World, what Can We Learn From Micro-Level Data?," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 455-486.
    15. Fritz Breuss, 2001. "Teilprojekt 12: Makroökonomische Auswirkungen der EU-Erweiterung auf alte und neue Mitglieder," WIFO Studies, WIFO, number 19838, April.
    16. Kohler Wilhelm & Jung Benjamin, 2017. "Wie vorteilhaft ist internationaler Handel?: Ein neuer Ansatz zur Vermessung der Gewinne," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 18(1), pages 32-55, April.
    17. repec:spo:wpmain:info:hdl:2441/6493 is not listed on IDEAS
    18. Rutherford, Thomas F. & Tarr, David G., 1998. "Trade liberalization and endogenous growth in a small open economy : a quantitative assessment," Policy Research Working Paper Series 1970, The World Bank.
    19. Shiro Takeda, 2010. "A computable general equilibrium analysis of the welfare effects of trade liberalization under different market structures," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(1), pages 75-93.
    20. Leon Bettendorf & Ben Heijdra, 2001. "Intergenerational and International Welfare Leakages of a Product Subsidy in a Small Open Economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(5), pages 705-729, November.
    21. Elbehri, Aziz & Hertel, Thomas, 2006. "A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 496-525.
    22. Matsuyama, Kiminori, 2017. "Geographical advantage: Home market effect in a multi-region world," Research in Economics, Elsevier, vol. 71(4), pages 740-758.

    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:empiri:v:27:y:2000:i:4:p:325-351. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.