English, Article edition: Eastern European Opening and EU Enlargement Fritz Breuss; Fritz Schebeck

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Physical Description
  • article
Language
  • English

Edition details

Title
  • Eastern European Opening and EU Enlargement
Author
  • Fritz Breuss
  • Fritz Schebeck
Physical Description
  • article
Notes
  • Liberalization of East-West trade since the breakdown of communism in 1989 has seen Austria as a net gainer. Its net exports with the East increased considerably, resulting in a trade surplus of ATS 16.5 billion in 1994, after years of balanced trade before 1989. Although in some sectors the comparative advantages of suppliers from Central and Eastern European countries (CEECs) drove domestic firms out of the market, the Austrian economy as a whole benefited from the opening up of Eastern Europe. According to model simulations, taking into account not only trade creation effects of the opening up of Eastern Europe but also indirect effects via German unification and immigration effects, Austria's real GDP was boosted by 2.4 percent in the five years since 1989. The export-induced additional output led to the creation of 56,000 new jobs in the whole economy. However, the immigration flows accompanying the liberalization process pushed up labor supply and hence unemployment. Besides the completion of European Monetary Union, the next big challenge for the EU is Eastern enlargement by possibly ten associated CEECs. The most likely approach will be a step-by-step membership of the CEECs, starting with the most advanced countries. Although there is no exact timetable for negotiations with the CEECs, one may expect the first negotiations to commence after conclusion of the Intergovernmental Conference 1996. From the Austrian perspective, the four neighbouring countries Czech Republic, Hungary, Slovakia and Slovenia would form an economically "optimal package" of new members. Taking into account not only the possible integration effects of a larger market, but also the additional cost of EU membership of CEE countries by their participation in the CAP and the structural policy, the article concludes that full EU membership of these four CEECs would lead to an increase of real GDP in Austria by 1.5 percent after nine years, starting in the year 2000. The initial budgetary costs of membership would in the long run be more than offset by additional tax revenues due to higher growth. From the point of the Austrian economy, any further enlargement would be a net burden, with the costs of membership outweighing the benefits. The reasons for this are manifold: First, Austria is only a marginal trading partner of the other CEECs. Second, the other CEECs (Bulgaria, Poland, Romania and the Baltic states) are less developed than the four neighbours and therefore would claim more resources from structural funds. Simulation of EU membership for all ten CEECs still shows a positive net effect for the Austrian economy. Austria's real GDP would be raised by 1.7 percent after nine years, with the integration effect offsetting the high cost of CEEC membership.
  • Ostöffnung und Osterweiterung der EU. Ökonomische Auswirkungen auf Österreich; Eastern European Opening and EU Enlargement
  • RePEc:wfo:monber:y:1996:i:2:p:139-151
Language
  • English
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