2.4.1 Expected Effects of EEUE

Academic Research paper and Study of the Economy of Romania and Romanian Business

EEUE was preceded by controversial debates with high expectations on the one side and se­rious concerns on the other side. Mass media often anticipated a flood of cheap labor overrunning Western Europe and a massive relocation of economic activities eastwards. EU officials stressed the benefits of EEUE and economists sought to forecast the effects of integrating the CEECs into the EU, thereby producing a vast bunch of studies and estimations.

A comprehensive ex ante study by Breuss (2002) considered “all possible integration effects” (ibid: 245), which were trade effects (reducing the costs of trade), single market effects (enhanced competition and efficiency), factor movements (FDI-flows from the West to the East and vice versa for labor) and transfer costs (eastwards from the West). An extensive listing of ex ante studies and estimations about the economic impact of EEUE was arranged on behalf the EC (2006 b: 25) and is reproduced in Appendix 1. Though they deployed quite different models the studies yielded consistent and even similar results (with respect to both the qualit­ative nature of the predicted effects and to their quantitative degree). This observation was also made by the EC (cf. ibid: 22), which additionally pointed out that even the degrees of aggregation and regions covered differed among the studies.

On average, all evaluations agreed that enlargement would be a “win-win” situation, both for the CEECs and the EU-15 (Baldwin et al. 1997: 125; Breuss 2002: 245; EC 2006 b: 1). Corresponding to the asymmetric size of the two blocs the shock of enlargement was expected to be much more pronounced in the CEECs than in the EU-15. Breuss predicted 5 – 6 % of additional GDP growth for Czechia and about 8 – 9 % for Hungary and Poland until 2011. Until 2008 the Old Member States (OMS) should increase their GDP about additional 0.5 %. Other estimations for the EU-15 ranged from somewhat lower values (Baldwin et al. 1997 estimated some 0.2 %, Heijdra et al. 2002 about 0.3 %) up to 0.6 % (Lejour et al. 2001). But it also turned “out that enlargement is not only about trade and growth potentials, but also about redistribution of income of labor market winners and losers” (Breuss 2002: 247). The OMS Austria, Germany and Italy were typically expected to profit more than other OMS from enlargement (Baldwin et. al. 1997) while Spain and Portugal might face a negative impact (Breuss 2002, Kohler 2004). Breuss also considered a negative impact for Denmark (Breuss 2002), Kohler (2004) for Ireland and Greece. Barry (2004), on the other hand, explicitly did not project any disruptive impacts for Ireland.

Most studies predicted only a moderate redistribution of income and labor. This might be because they relied on data provided by Boeri & Brucker (2001). They estimated a net migration inflow of about 335,000 persons for the first year and a subsequent decline to some 100,000 or 150,000 per year, with Austria and Germany as main destinations. Around 35 % of them were expected to be workers. Hence, the stock of about 0.85 million migrants from the CEEC in the OMS (2001) was expected to increase up to 3.9 million in a period of 30 years. Blanchard (2001) criticized these estimations as systematically to low. On the other hand, the free movement of workers remains restricted up to 2011, anyhow. Only three OMS (Ireland, Sweden and the UK; cf. EC 2006 b: 80) were not restricting their labor markets in 2004. For the case of ending this restrictions Marques & Metcalf projected stronger effects, though, they relied themselves on the estimations provided by Boeri & Brucker. The migration issue remains to be readdressed in chapter