Costs and Benefits of the EU's Eastern Enlargement for Austria
With the adoption of the Agenda 2000 in July 1997, the European Commission initiated the enlargement of the European Union to the east. Ten Central and East European countries (CEECs) were evaluated as candidates for membership in the EU. Five countries (Estonia, Hungary, Poland, the Czech Republic, and Slovenia) and Cyprus were chosen as candidates for accession negotiations, which officially started on 31 March 1998. The bilateral negotiations began in earnest on 10 November 1998. The other five CEECs (Bulgaria, Romania, Slovakia, Latvia, and Lithuania) will be involved in the preaccession strategy. Whether Slovakia and Latvia will be included in the first group of prospective members on the basis of the favorable Commission's progress report on these two countries remains an open question. The Agenda 2000 and the negotiation procedure established so far indicate that the accession of new members will take place in two waves. Given these perspectives, the financial costs and benefits of the eastern enlargement of the EU for Austria were again evaluated on the basis of the WIFO macroeconomic model (the first analysis of this question was carried out in 1995/96). The model simulations for the period of 2002 to 2010 are based on the assumption that the first group of five CEECs will join the EU in 2002 (this assumption corresponds to the budget projections of the EU Commission), and that the other CEECs will accede to the EU in 2007. The assumptions underlying the model simulations are derived from integration theory and the budget framework of the European Commission for the period 2002-2006. In several steps, the direct and indirect trade effects as well as the effects of improvements in the terms of trade, changes in tourism, the increase in direct investment, and the financing costs imposed on Austria were calculated. The simulations do not take into account the effects of migration, which will strongly depend on the length of transition periods, which are likely to be agreed upon. In sum, the enlargement of the EU to the east may have a positive impact on almost all aggregates of Austria's economy. By the year 2010, real GDP is projected to be 1.3 percent higher than in a scenario without enlargement. This increase will be accompanied by an employment gain of 27,000 persons. The price level is expected to be 1 percent lower, and the government deficit is calculated to be lower by 0.4 percent of GDP.
Kosten und Nutzen der EU-Osterweiterung für Österreich; Schwerpunkt "EU-Osterweiterung"; Costs and Benefits of the EU's Eastern Enlargement for Austria
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