EU Eastern Enlargement: Economic Effects on New Members 2000-2012

Abstract

The European Union (EU) has a splendid record concerning enlargement. Judging by the number of EU member countries, enlargement has been the most successful EU policy ever. The economic side of its eastern enlargement is a hybrid bag of effects for the EU's eastern countries. Membership in the EU is not a tide that lifts all boats. This primer provides data for the period 2000-2012 which show that economic growth, expansion of trade and increase in foreign direct investment to the east of the EU are obvious successes and gains for the ‘new’ EU countries. The eastern countries are modernising, but there is a cost: an incredible acceleration in domestic and foreign debt which financed these successes. The danger is that this debt burden may partly suffocate the newly acquired economic vigour in the EU's east, especially at a time when there are serious concerns about the future of the eurozone and the EU.

Keywords: enlargement, old and new EU countries, debt, mixed blessing

JEL Classification: F13, F15, F50