Academic journal article Journal of Economic and Social Studies

Costs and Benefits of the EU Enlargement: The Impact on the EU and SEE Countries

Academic journal article Journal of Economic and Social Studies

Costs and Benefits of the EU Enlargement: The Impact on the EU and SEE Countries

Article excerpt

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Introduction

The South-eastern enlargement of the European Union (EU) - the sixth since 1973 - is a huge test for the EU, as well as for the applicant countries. The European Union consists of 27 members. Besides incumbent members, there are candidates and potential candidates. The enlargement with candidates and potential candidates is going to increase the EU area by 25%, the number of population by 19%, and absolute GDP by 5%. Although the exact time of accession is not clear yet, the European Commission is planning to start with a group of 3 states that are Croatia, Montenegro and Iceland. The applicants from South-eastern Europe are relatively poor countries with a GDP per capita below the EU average. The average GDP per capita of nine countries is $10,490 that would be 3 times lower compared to EU-27 or 4 times lower compared to EU-15.

Similar to the third EU enlargement, the next enlargement would be a new challenge for the EU countries, as the integration of poor with rich countries increases heterogeneity. The South-east European countries will enter the EU on the basis of the Treaty of Accession. Once they access the EU, the members will be part of a union and a single market. A union of 27 countries with over 501 million consumers which have access to a single market is of huge importance. Construction of a single market of the European Union has brought the new impact, and improved the emergence of a common EU policy such as competition policy. The EU constantly works on the improvement of common policies, especially on a common market. Those policies have gained great importance since they strengthen mutual trade, improve the quality of products and services, and also expand the market, and most importantly they reduce trade barriers and increase positive effects of the common market. As a result, EU policies preserve the good functioning of the market, and the European Commission prevents or corrects the non-competitive behaviour of companies. In South-east European countries consumers enjoy a freedom of choice that is characterized by almost the same prices, lower quality and fewer innovations compared to the EU standards. The competition is present between South-east European Countries (SEEC's), but they are not competitive to the EU single market. These countries cannot achieve scale of economies or competitive advantages as the EU countries do. This research aims to discuss economic costs and benefits of the EU enlargement to SEEC's. The objective of this study is to show gains from trade for both sides, the European Union and SEEC's.

From Maastricht Treaty to the Single Market and Single Currency

In order to improve trade among them, six countries (Belgium, France, Germany, Italy, Luxembourg and the Netherlands) have adopted first four regulations for a common market in agriculture, finance and regulation of governing competition. On 1 January 1973, Denmark, Ireland and the United Kingdom joined the EU. The first Balkan country, Greece, became the 10th member of the EU in 1981. The situation was stable until Berlin Wall fell in 1989, after which the European Economic Community (EEC) member states were negotiating over a new treaty in Maastricht in December 1991. The collapse of communism throughout Central and Eastern Europe has connected Europeans. As a result, in 1993, the idea of a Single Market was completed with free movement of goods, services, people and money.

Europe's single currency, the Euro, replaced the old currencies on 1 January 2002, when 12 EU Member States adopted it as their official currency, creating the euro zone. The euro zone aimed to make life easier for businesses, consumers and travellers.

On 1 May 2004, 10 countries became members of the EU: the Czech Republic, Cyprus, Hungary, Malta, Poland, Slovakia, Estonia, Latvia, Lithuania and Slovenia, while Bulgaria and Romania were accepted into the EU on 1 January 2007. …

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