The EU recently admitted the Eastern European countries. How do you assess the impact of the EU\'s expansion? What are the costs and benefits of the expansion for the U.S. economy?
Solution
The accession of eight Central and Eastern
European countries (CEECs) to the European
Union in 2004 will bring some important bene-
fits. The new members will gain from reduced bar-
riers to trade and investment. By 2010, the move-
ment of labor will also be freed. But accession to
the EU is neither a necessary nor a sufficient con-
dition for economic growth. The combined effects
of market access and economic liberalization, not
EU membership, optimize economic growth.
Unfortunately, the incoming EU members had
to choose between the common market on the
one hand and economic liberty on the other.
Instead of concluding free-trade agreements with
the EU, the CEECs were cajoled into an increas-
ingly centralized superstate, in which most of
their comparative advantages will be legislated out
of existence. As a result, economic growth in
Central and Eastern Europe (CEE) will continue
to be suboptimal. The loss of potential future eco-
nomic growth will be only partly offset by the
CEEC
.
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The EU recently admitted the Eastern European countries- How do you as.docx
1. The EU recently admitted the Eastern European countries. How do you assess the impact of the
EU's expansion? What are the costs and benefits of the expansion for the U.S. economy?
Solution
The accession of eight Central and Eastern
European countries (CEECs) to the European
Union in 2004 will bring some important bene-
fits. The new members will gain from reduced bar-
riers to trade and investment. By 2010, the move-
ment of labor will also be freed. But accession to
the EU is neither a necessary nor a sufficient con-
dition for economic growth. The combined effects
of market access and economic liberalization, not
EU membership, optimize economic growth.
Unfortunately, the incoming EU members had
to choose between the common market on the
one hand and economic liberty on the other.
Instead of concluding free-trade agreements with
the EU, the CEECs were cajoled into an increas-
ingly centralized superstate, in which most of
their comparative advantages will be legislated out
of existence. As a result, economic growth in
Central and Eastern Europe (CEE) will continue
to be suboptimal. The loss of potential future eco-
nomic growth will be only partly offset by the
CEEC
