The expansion of the EU to embrace more countries has been perhaps the most important development in Europe in many years. Since 1957 then there have been six main waves of enlargement.
For new EU members the opportunities of participating in the EU single market have been centered on attracting high levels of inward investment, and promoting their economic development through free trade access to the higher income consumers of advanced EU nations. The Central and Eastern Europe (CEE) region experienced a five-fold increase in foreign direct investment (FDI) inflows between 2003 and 2008, rising from US$30 billion to US$155 billion – although much of this went to Russia which is outside of the EU. Inward investment was particularly attracted to countries with low relative unit labour costs in manufacturing and where expected growth of per capita incomes was high.
In addition they have been recipients of EU funding -- which have financed road construction, environmental clean-up schemes, job training and other supply-side projects.
How has EU enlargement affected the UK economy?
The UK government has for many years championed the further expansion of the EU single market. It favours bringing more countries into the European Union partly because of a belief that the UK's own economic performance can improve as a result (economists term this a “positive-sum game").
Among the benefits cited from having more countries within the market here are four key ones:
Risks of EU Enlargement for the UK
Case Study: Croatia Joins the European Union
Croatia joined the European Union on the 1st of July 2013 as its 28th member. It is be the second ex-Yugoslav state to become an EU member after Slovenia, which joined in 2004.
Accessing the EU single market
In the medium term, full access to the single market, increased investor confidence and stronger financial integration should boost the economy – provided that Croatia manages to implement overdue structural reforms, in particular tackling a rigid labour market, an overblown public sector and a weak business climate. Croatia's accession will only have marginal effects for the EU economy as a whole. Croatia will be the 9th smallest country in the EU by GDP size at 0.34% of the total. Its population will account for 0.87% (8th smallest). The Croatian GDP per capita (in PPS) in 2011 amounted to 61% of the EU27 average.
Trade integration with Europe
27% of Croatian exports are sold to Germany and 17.5% to Italy. Overall, 60% of exports go to members of the single currency area. It is highly unlikely that Croatia will join the single currency in the near future. The Croatian currency, the kuna, is informally pegged to the euro. With around 70% of loans and above 60% of deposits denominated in or linked to foreign currency
Structural problems lie at the root of Croatia's medium term problems. These include a low diversification of Croatia's exports, which mainly rely on shipyards as well as (a strong) tourist industry, two strongly pro-cyclical sectors. The competitiveness of Croatia is low, reflecting in particular rigidities in the labour market, an overblown public sector, and a weak business climate. Labour costs are relatively high compared to productivity. According to the European Commission, the shadow economy could account for 40% of GDP.
Global competitiveness rankings for 2013 (out of 144 countries surveyed)
Access to EU funds
Now that the country is part of the EU single market, Croatia will gain access to the Cohesion Fund, the Structural Fund and the European Fisheries Fund. The total sum of approved funds for Croatia amounts to 1.5% of their GDP.
Changes in PPP per capita income for the EU's newer member nations
How much do countries benefit from membership in the European Union? http://www.voxeu.org/article/how-poorer-nations-be...
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