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The economics of the 'European Neighbourhood Policy': An initial assessment


  • Susan Milcher
  • Ben Slay


This paper describes the general framework of the EU’s emerging relationship with its new neighbours and investigates the potential economic impact of the European Neighbourhood Policy (ENP), both for the EU itself and for its neighbours. In particular, it seeks to develop an answer to the question of whether the ENP is sufficiently attractive so as to induce the governments in neighbourhood countries to adopt (or accelerate the adoption of) the types of economic and governance reforms that were implemented in the new member states during their accession processes. Although the specifics of the ENP are still being developed, the lack of incentives as regards to unclear accession to the EU is identified as the main weakness of the ENP. Economically, the ENP seeks to ease trade restrictions through the implementation of legislative approximation and convergence with EU standards, before accessing the EU’s single market can become a reality. Positively though, is that the access to the single market could improve significantly under the ENP. As experienced by the Central European states, FDI is instrumental to transform the economies of the Western CIS and the Caucasus. The ENP can be a supportive framework for improving investor confidence. Likewise, the new European Neighbourhood Instrument can add more coherence in technical assistance, and provide more financial support for creating capacities for trade infrastructures and institutional and private sector development. Finally, measures to promote increased labour migration between the new neighbours and the enlarged EU may be worth to put on the agenda for the future development and impact of the ENP.

Suggested Citation

  • Susan Milcher & Ben Slay, 2005. "The economics of the 'European Neighbourhood Policy': An initial assessment," CASE Network Studies and Analyses 0291, CASE-Center for Social and Economic Research.
  • Handle: RePEc:sec:cnstan:0291

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    References listed on IDEAS

    1. Klein, Michael, 2003. "Ways out of poverty : diffusing best practices and creating capabilities - perspectives on policies for poverty reduction," Policy Research Working Paper Series 2990, The World Bank.
    2. Leon Podkaminer, 2004. "Transition Countries on the Eve of EU Enlargement," wiiw Research Reports 303, The Vienna Institute for International Economic Studies, wiiw.
    3. Martin, Carmela & Turrion, Jaime, 2003. "The Trade Impact of the Integration of the Central and Eastern European Countries on the European Union," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 288-306.
    4. Joze Mencinger, 2003. "Does Foreign Direct Investment Always Enhance Economic Growth?," Kyklos, Wiley Blackwell, vol. 56(4), pages 491-508, November.
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    Cited by:

    1. Marek Dabrowski & Artur Radziwill, 2007. "Regional vs. Global Public Goods: The Case of Post-Communist Transition," CASE Network Studies and Analyses 0336, CASE-Center for Social and Economic Research.


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